Investing in life
changing science
Annual report and accounts 2022
Annual report and accounts 2022
Strategic Report
1 Highlights
2 At a Glance
4 Investment Proposition
5 Chairman’s Statement
8 Chief Executive Officer’s Review
11 Market Insight
12 Our Investment Strategy
13 Business Model
14 Our Strategic Objectives
15 Key Performance Indicators
16 Portfolio Review
18 Broad and Rich Clinical Pipeline
19 Core Portfolio
23 Public Opportunities Portfolio
24 Financial Review
27 Risk Management
32 Our Stakeholders
34 Sustainability
Corporate Governance
36 Corporate Governance Report
42 Board of Directors
44 Report of the Nomination
Committee
48 Report of the Audit and Risk
Committee
52 Directors’ Remuneration Report
69 Directors’ Report
Financial Statements
73 Independent Auditors’ Report
80 Financial Statements
Other information
108 Shareholder Information
109 Glossary
Arix Bioscience plc is a global venture
capital company focused on investing
in breakthrough biotechnology
companies to deliver superior
risk-adjusted returns to shareholders.
Contents
Our Purpose Our Goal Our Values and Expectations
To generate superior returns for our
investors and to make a tangible
difference to patients’ lives, by
investing in a focused portfolio of
innovative biotechnology companies
addressing areas of high unmet need
in healthcare
Delivery of double digit NAV growth
through a diversified portfolio of
biotechnology investments
Our values and expectations are
at the heart of everything we do
and form an important part of our
culture.
• Integrity
• Respect
• Transparency
• Collaboration
• Discipline
• Accountability
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Highlights
Net Asset Value (NAV)
£226m
2021: £255m
Realised capital
£21m
2021: £39m
Strategic reportCorporate governanceFinancial statementsOther information
Performance snapshot
Operational highlights
Business highlights
NAV per share
175p
2021: 198p
Capital pool
£123m
2021: £134m
Gross Portfolio net revaluation*
(£19m)
2021: (£54m)
Capital raised by portfolio
companies in 2022
$134m
2021: $776m
> Agreement to acquire Twelve Bio by Ensoma in an all share transaction with concurrent
financing which was completed in February 2023
> Reverse merger of Disc Medicine onto Nasdaq completed in December 2022,
15 months after first Arix investment
> Cost run rate below 2% of Net Asset Value
*Year on year net movement includes investments, FX, and impairment.
2 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
At a glance
Investment strategy providing resilience through market cycles
We focus on innovation and partner with highly experienced entrepreneurs to create companies that can significantly
improve patients’ lives.
Geographic split
11.11%
22.22%
66.76%
USA
Europe
UK
Therapeutic split
33%
11%
44%
11%
Genetic
diseases
Immunology
Oncology
Ra re
diseases
Development stage split
57%
43%
Clinical
Preclinical
Diverse portfolio
We collaborate with experienced
entrepreneurs and provide the capital,
expertise and global networks to help
accelerate the science they have developed
into important new treatments for
patients. As a listed company, we are able
to bring this exciting growth phase of our
industry to a broader range of investors.
We are here for two key reasons. To generate superior returns for our investors
and to make a tangible difference to patients’ lives.
Who we are:
Arix Bioscience plc is a global venture
capital company focused on investing
in breakthrough biotechnology
companies.
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At a glance continued
Strong clinical trials pipeline
Collectively our portfolio companies were running 11 clinical trials at 31 December 2022, with a further 9 in preclinical
development.
NAV per share
175p 2021: 198p
Clinical trials
11 (2021: 22)
Capital Pool
£123m 2021: £134m
Rolling 36 month goals
2 x successful exits
Double Digit NAV per share
Growth
Maintain cost base
within 2% of NAV
2 x IPOs
ON TARGET-9% annualised in 2020-2022
BELOW TARGET
(11% 2019-2021)
ON TARGET
ON TARGET
Read more in the Chairman’s statement on page 5.
Read more on our Pipeline on page 18.
*NAV Per Share = NAV / Total Number of Issued Shares less those held in treasury.
4 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Investment proposition
Public market access to ground-breaking medical innovation
1 Large, high-growth industry
Biotech’s core fundamentals are strong: long-term,
sustainable growth drivers, resilient, attractive M&A
environment.
Arix provides unique exposure to a portfolio of high growth
global biotech companies, both private and public, through
a listed vehicle.
Read more in Market Insight on page 11.
2 High impact and value creation
potential
Diverse portfolio of companies addressing significant
unmet needs in healthcare, with the potential to deliver
breakthrough treatments to patients.
Multiple near to mid-term milestones anticipated with the
potential to deliver significant returns, including: new data
readouts, initiation of new trials, further funding rounds
and potential for IPOs and M&A.
Read more in the portfolio review on page 16.
3 Expertise and networks
Expert team with deep scientific, commercial and
transactional expertise and a proven track record of success
to drive growth in portfolio value.
Arix’s global networks and transatlantic team provide
access to a large pool of opportunities across the full
spectrum of biotech disciplines and a deep understanding
of the industries and markets in which we invest.
4 Active, disciplined capital management
Initial investments are typically tranched to pre-agreed
milestones supportive of the original investment thesis.
Active management of public portfolio positions to manage
risk and optimise returns.
Transparent valuation policy; valuations adhere to IPEV
Guidelines.
Read more in the Financial review on page 24.
To see how our investment case works in practice, please
see our Business Model on page 13.
5 Uncorrelated returns
The healthcare and pharma sector is generally uncorrelated
with other industries and the wider macroeconomic
environment. As big pharma are a key driver of the biotech
sector through M&A, the potential for cash exits from our
portfolio is less impacted by the broader economic cycle.
Our core purpose is to help translate
scientific innovation into new medicines
for patients. Through the portfolio of
companies that we back and build, we
aim to address significant challenges
in healthcare in the areas of oncology,
genetic diseases, immunology and
anti-infectives.
At Arix we focus on outcomes beyond financial
performance and through our portfolio companies we hope
to make a tangible difference to patients’ lives. To date, we
have invested more than £200m into innovative biotech
companies in our Gross Portfolio, which, in turn, have since
raised more than $3bn of funding.
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Introduction
At the start of 2022, we had grave concerns about financial
market conditions. I am pleased to report that, post year
end, the outlook is more positive. We have always held
the view that our particular area of the market is not as
subject to the cyclical impact of consumer demand as
other areas of the economy. As such, we believe that as
the cost of capital starts to decline, the sector will recover.
We are already seeing signs of funds coming back into
the market and a pick-up in M&A, albeit modest, by large
pharmaceutical companies.
Our NAV during 2022, continued to be affected by the
protracted weakness in public markets that began in late
2021. Our response to those challenging conditions was to
adopt a judicious approach to the deployment of cash and
pause our core investing activity of taking large positions in
unlisted companies.
Instead, with a significant disconnect between depressed
public valuations and elevated private valuations, we
created a “public opportunities” portfolio of between 5%
and 10% of NAV to invest in undervalued listed companies,
many of which we had assessed when they were still
private. Across the entirety of the portfolio, we took
decisive action to exit positions that we felt no longer
offered compelling prospects, either for their growth
potential or as M&A targets.
We also strengthened the Board with new additions which,
as well as improving corporate governance, brought deep
and complementary life sciences sector expertise from
which we continue to benefit.
Performance
Compared to the prior year end, the net asset value fell
from £255 million to £226 million (from 198p to 175p per
share). The reduction was predominantly driven by share
price declines in some of our legacy Nasdaq-listed holdings.
Our decision to conserve cash has served us well. While
the market price and discount to NAV of our shares
reflect considerable risk aversion with regards to venture
investments in biopharmaceutical companies, our strategy
has helped to protect the downside on our shares. We
ended the year with £122.8 million in cash compared to
£134.2 million in the prior year.
In view of the considerable market uncertainties, we
continued to focus on the optimised management of our
existing portfolio. This was borne out by our participation
in the Disc Medicine fundraising in support of its merger
with Gemini Therapeutics, and the merger of Imara with
Enliven which we continue to hold. The maturation of the
portfolio enables us to demonstrate our strategy in action,
along with our ability to identify and support businesses
with products and technologies that are attractive to large
pharmaceutical company buyers.
Corporate Governance
We continue to benefit from improved governance on
the Board, having introduced new skills and balance with
the additions of Dr Debra Barker and Andrew Smith as
Senior Independent Director and Non-Executive Director
respectively. Debra is a seasoned international life sciences
executive with more than 25 years’ senior and board
experience from start-up biotech to big pharma companies,
while Andrew is an internationally experienced CFO and
COO with strong financial and operational experience
in US, Swiss and UK-based biotech and pharmaceutical
companies.
The appointments were coincidental with the resignation
of Sir Michael Bunbury. I am thankful to Sir Michael for
the stewardship he provided and for his contribution to
improving corporate governance at Arix during his tenure.
Together with Maureen O’Connell and Isaac Kohlberg,
Non-Executive directors proposed by Acacia Research
Corporation, we have a Board that encompasses a breadth
and depth of investment and sector expertise, and a
collegiate group of highly experienced and competent
individuals who are all aligned on achieving success for Arix.
Progress on key targets
Our key performance indicators exist to ensure that
our core value-creating portfolio companies receive the
appropriate level of strategic and financial support to
maximise the company’s risk-adjusted investment return.
While they are helpful markers of success, the dynamic
environment in which we operate necessitates an agile
approach, which is why we take a long-term view with
targets set over a rolling 36-month period.
• Following IPOs from Aura and Pyxis Oncology in 2021,
Disc Medicine completed a reverse merger in 2022,
exceeding our target of achieving two IPOs over a
36-month period.
• We have maintained costs to within 2% of NAV (under
normal market conditions) and anticipate that we will
continue to do so.
• Having already achieved two strategic exits ahead of our
2023 target, there were no exits in 2022 beyond the sale
of legacy positions in some of our listed company holdings.
We are attuned to the vagaries of market sentiment and
its impact on sector activity, and we will not seek to achieve
exits where they compromise our ability to generate a
return in order to achieve an arbitrary, short-term target.
As ever, we are focused on one over-arching objective: to
deliver significant returns to shareholders through double-
digit Net Asset Value growth over the long term. We believe
that this can be achieved through a range of different
portfolio events, the timing of which may vary.
Chairman’s Statement
6 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Chairman’s Statement continued
Market overview
The market correction that began in 2021 continued in
2022. The major sell-off in small and micro-cap biotech
stocks took the XBI, an equal-weighted biotechnology index
and indicator of the general health of the sector, from
$112 on 31 December 2021 to $83 per share at the end of
2022, a 26% decline after bottoming out at around 63%
twice in May. A confluence of macro-economic and political
events drove up the cost of capital creating a challenging
environment for the biotech sector. Investors took flight to
safety as capital dried up, financing costs soared and equity
markets declined. The sell off has been broad, with many
new and non-specialist investors reducing their exposure to
the biotech sector.
Inevitably smaller biotech companies felt the effects more
acutely. Even those companies with positive clinical trial
data often failed to impress investors. The number of
biotech companies trading below cash remains far in excess
of the pre-COVID normal. It is indicative of how the industry
has reset valuations and is positioned for a recovery.
The IPO window remained mainly shut, with
Evaluate
Vantage
reporting only 19 flotations over the year. The
closing of the IPO window also hit the biotech venture
world, with sums deployed markedly lower than in 2021.
While many private companies seized the opportunity to
raise capital prior to the slow-down, ongoing economic and
geopolitical concerns will impact the timing of a recovery in
2023, affecting both private and public financings. This has
created an environment of ‘haves’ and ‘have nots’; those
companies with clinical data will have an easier time raising
capital and doing strategic deals while those without such
data will find fundraising increasingly difficult, requiring
other avenues such as mergers to stay afloat.
The result has been a forced consolidation in the market,
where companies with cash combine with those in need
of capital. In recent months we have seen some signs
of interest in those companies at the larger, late-stage
development end of the scale, notably Amgen’s $28.3 billion
acquisition of Horizon Therapeutics and Pfizer’s agreement
to acquire Seagen for $43 billion. Inevitably, the proceeds
from these large deals will be recycled in the market, and
we anticipate a trickle-down effect in time. We have
already seen two meaningful mid-cap M&A deals in CinCor
Pharma (acquired by AstraZeneca) and Amryt (acquired by
Chiesi) since the start of 2023 and expect more to come.
Following the banking crisis that resulted in the collapse of
Silicon Valley Bank, and the subsequent Federel Reserve
announcements about interest rates, it seems likely that we
will have a sustained period of stable interest rates without
further, major, increases which will allow valuations to
settle and some confidence to return to parts of the equity
market during this year. After the incontinence of monetary
policy during the years 2019 through 2021, the Fed has
for historic reasons been reluctant to halt rate increases
while US employment statistics remain strong, in spite of
declines in money supply measures M1 and M2 over the
past 15 months. With total US bank deposits continuing to
fall week by week, it is likely that inflation will drop further,
creating improved market conditions for our sector.
Applying our flexible investment strategy
One of our competitive advantages is our ability to be
nimble in responding to changing market conditions
and the opportunities that they present. In terms of our
policy last year, the Board considered the importance of
conserving cash to ensure that our investors were protected
against the downside during a period of significant market
uncertainty. We anticipated a correction in private company
valuations, which tend to lag the public market and pivoted
towards public company investing.
While we continue to see value in the public markets, we
are beginning to see some attractive valuations for high
quality companies in the private market and expect to add
to this part of our portfolio very selectively. Our support
of Ensoma at the beginning of 2023 is one such example.
While in previous years, we have sought to take a lead or
co-lead position on private company financings, we now
prefer to take smaller positions to increase our number of
potential successful outcomes and overall portfolio liquidity.
This strategy has become more viable now that the market
has become increasingly selective and that we are being
given access to a wide-ranging number of opportunities.
While we anticipate that 2023 will be a more propitious
environment for exits, we also note that unlisted company
valuations have come down. We are seeing a number of
compelling opportunities to make smaller private equity
investments, with smaller follow-on commitments, where
we will have the ability to exit in a relatively short time
period without having to commit a substantial portion of
NAV. The Board considers the importance of diversifying
risk by ensuring we have a greater spread of opportunities
within the portfolio, giving us more ‘shots on goal’ and
introducing more liquidity into the Core Portfolio.
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Chairman’s Statement continued
We will also continue to invest in listed companies through
our Public Opportunities Portfolio, being approximately
5-10% of NAV. While initially we looked at this strategy
as being defensive in case of a speedier reversion to more
normal valuation metrics, our positioning has become more
aggressive in seeking stakes in companies with attractive
M&A potential in the near term.
Overall, we will take a very balanced view of capital
deployment. We will be led by our perception not only of
pharma interest in general but also of the level of pharma
interest in our holdings in particular.
Share Repurchases
Consistent with our strategy of creating and delivering
value for all stakeholders, the Board is seeking to renew the
authority to purchase up to 10% of its issued share capital,
to be cancelled or held in treasury for future reissuance. The
Board may not necessarily use the authority in 2023 but
considers that buybacks are an attractive mechanism to
improve liquidity for sellers while potentially generating a
substantial uplift in NAV for ongoing shareholders.
Outlook
The current discount to NAV which our share price currently
trades at is partly a consequence of increased investor
risk aversion, as well as a reflection of the widening in the
bid-ask spread, particularly in unlisted securities. While
“risk-off” sentiment in response to macroeconomic and
geopolitical drivers is likely to persist for some time, we are
seeing a broadening of our shareholder base, which should
be of benefit when there is a change in the cost of capital
cycle. We are, however, currently maintaining a cautious
approach to capital deployment, with significant cash and
short-term treasury balances continuing to provide some
downside protection, while we work on achieving significant
exits.
We are navigating the headwinds facing the bio-
pharmaceutical sector with careful adjustments to our
portfolio, based on expected risk and return. With signs
that M&A activity is returning to the sector, we are well
placed to achieve our goal of generating superior returns
with our portfolio of diverse companies developing
innovative treatments which will make a tangible difference
to patients’ lives.
Peregrine Moncreiffe
Chairman
24 April 2023
8 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Chief Executive Officer’s Review
Introduction
As it was for many, 2022 proved more challenging than
we had hoped at the start of the year. Markets were
performing worse in the fourth quarter than in the same
period in 2021 when life sciences stocks first began a steep
fall. In the ensuing market correction, we are seeing a more
conservative environment and a flight to quality, with the
market oriented more towards value, from which Arix
has been a beneficiary. Through testing times our Listed
Portfolio navigated tough conditions, with some having
taken the opportunity to raise capital in 2020-2021 when
markets were more receptive, leaving them well-funded
through 2023.
Our decision to be selective with capital deployment proved
well-judged. During the Period, we committed £11.1 million
to the Core Portfolio and ended the year with a £13.5
million exposure in our Public Opportunities Portfolio. We
began 2023 in a strong position to be able to support our
existing portfolio and invest in new opportunities that can
improve outcomes for millions of patients and achieve
healthy returns for shareholders.
We welcomed the Government’s intervention in the rapidly
evolving situation at Silicon Valley Bank (SVB) in the UK
in March 2023 which resulted in its rescue by HSBC and
demonstrated the strategic importance of the life sciences
sector to the UK economy.
At Arix, we had a
de minimis
exposure to SVB, through
brokerage accounts at SVB Leerink. While we have no direct
exposure to SVB, the swift action by the US authorities
ensured that none of our investee companies encountered
any banking problems. Our portfolio companies have a
range of banking relationships, some of which include SVB.
We worked closely with affected portfolio companies
through the period to support them in their efforts to
mitigate any risk from SVB. We were pleased that the
situation was resolved with no disruption to the trading or
prospects of Arix or our portfolio companies.
Performance
After a modest fall early in the year, NAV remained steady
during 2022 with small fluctuations led by developments
in the portfolio including market movements for listed
investments, continued cost control and movement in
foreign exchange rates.
At the year end, we reported a decline in NAV to £226
million (31 December 2021: £255 million), or 175p per
share (31 December 2021: 198p per share) representing a
reduction of 11%. The decline was driven by a reduction in
the valuation of the Gross Portfolio of £18.6 million to £99.6
million predominantly as a result of downward movement in
our Core Portfolio public company holdings.
In common with many of our listed peers, risk aversion in
the market affected our share price, which also came under
pressure. While the discount to NAV was stable during the
year, this is an area of focus for us as we seek to ensure that
shareholders benefit from the value of our assets.
In a year when public markets were markedly subdued it is
unsurprising that both the NAV and the share price did not
perform as hoped. Weak public markets have limited the
funding opportunities for many biotech companies and in
turn reduced the competitive tension which drives the M&A
market. This combination impacted the performance of the
Core Portfolio.
Within the Core Portfolio, the most significant movement
was Harpoon, where the value of our holding reduced
from £12.2m at the start of the year to £1.3m at year
end. Clearly this was a very disappointing performance
reflecting a significant downrating of the company by
public investors. Harpoon began significant action in
November 2022 to restructure and refocus the business,
which we expect to bear fruit in 2023 as important data
read-outs are announced.
Aura is another public holding which suffered from the
challenges of the public biotech markets in 2022, despite
the impressive clinical progress it made. The valuation of our
holding in Aura fell over the period from £20.0m to £13.2m.
We feel that this downrating is unwarranted and look
forward to an improved appreciation of Aura’s progress as
confidence returns to the sector.
By contrast, Imara saw a doubling of valuation during
2022, rising from £3.9m to £7.8m at year-end. Although
this holding value is still below the original cost, the
improvement over the period is testament to the
management team’s handling of the clinical failures
suffered in April 2022. After these setbacks, and to preserve
capital, Imara diligently cut costs and positioned itself as
a prime merger candidate, executing a successful reverse
merger with Enliven at the end of 2022. This has been well
received by the market and provides us with an interesting
new prospect for value creation and realisation in the Core
Portfolio.
In the unlisted portfolio, a write down of STipe Therapeutics
of £3.7 million was partially offset by a write up of our
holding in Twelve Bio of £1.2 million following its acquisition
by Ensoma.
We began our Public Opportunities Portfolio in February
2022, investing in a range of undervalued public biotech
companies. This is a dynamic portfolio of liquid positions
which we actively manage in response to market conditions
and individual company performance. By the end of 2022,
the value of the Public Opportunities Portfolio was broadly
flat at £13.5m against a cost of £13.6m. This compares
favourably with the XBI which had fallen 9.6% from when
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Chief Executive Officer’s Review continued
we began the Public Opportunities Portfolio, to 2022
year-end. As of 13 April 2023, we had maintained this
out performance with the Public Opportunities Portfolio
recording only a marginal fall in value of 0.4% against a
drop in the XBI of 13.5% over the same period. The Public
Opportunities Portfolio is well placed to benefit from the
individual progress of the companies we have selected and
a future change in sentiment towards these public stocks
more generally.
Since the beginning of 2023, NAV performance has
decreased by approximately 2%, to £222m, primarily as a
result of weak public equity markets impacting our listed
investments.
At year end we held cash of £122.8 million, slightly
down from £134.2 million at the end of 2021, with new
investments of £11.1 million deployed into new and existing
portfolio companies during the year. This healthy cash
balance, which can be attributed to previous realisations,
leaves us well placed to make new investments to refresh
the portfolio while we separately exit legacy positions.
Portfolio Overview
Throughout 2022 we continued our efforts to generate
value for shareholders through important portfolio
developments. We ended the year with nine companies
across various therapeutic areas in the Core Portfolio, five of
which were private and four of which were public, all having
floated following previous private investment by Arix.
While we adopted a highly selective approach to capital
deployment during the period, we demonstrated our
commitment to developing the portfolio with our
investment in Ensoma at the end of the year, alongside two
important public mergers in the portfolio, Disc Medicine
and Imara Inc. The former of these two was a validation of
our capital commitment, occurring within 15 months of our
initial investment. Disc now holds enough cash to advance
its clinical programmes well into 2025 and beyond. Our $9
million investment in Ensoma as part of a financing we
co-led with 5AM Ventures coincided with the acquisition
of portfolio company Twelve Bio for a modest uplift. These
types of transactions demonstrate our readiness to pursue
the right deals at the right time.
Portfolio progress
Overall, the portfolio made good progress in 2022, with
several companies reaching important clinical milestones
and securing financing.
Disc Medicine announced positive Phase 1 data of DISC-
0974 in healthy volunteers, thus de-risking further clinical
development and paving the way for Phase 2 studies.
Based on the successful Phase 1 trial, Disc initiated a Phase
1b/2 clinical trial of DISC-0974 in myelofibrosis patients
with severe anaemia. In addition, Disc started two Phase
2 studies of bitopertin in patients with erythropoietic
protoporphyria and X-linked protoporphyria, respectively.
Disc completed a merger with Gemini Therapeutics to
create a NASDAQ-listed company with sufficient financing
through all upcoming clinical data readouts and well into
2025.
Artios Pharma advanced its two clinical-stage assets
through clinical trials and entered Phase 2 clinical
development. For the first time Artios announced clinical
data from human studies, highlighting encouraging safety
and early signs of clinical activity. Notably, one of the
initiated clinical trials is a Phase 2 study with PolØ inhibitor,
ART4215, in combination with Pfizer’s PARP inhibitor
talazoparib in patients with BRCA deficient breast cancer.
Aura Biosciences presented positive interim data from
its ongoing Phase 2 trial evaluating suprachoroidal
administration of AU-011 for the first-line treatment of
patients with early-stage choroidal melanoma. The data
showed encouraging efficacy as well as safety. Based
on this data, Aura aligned with regulatory agencies and
finalised the design of the planned global Phase 3 trial.
The trial will evaluate the efficacy and safety of AU-011
with suprachoroidal administration, for the first-line
treatment of early-stage choroidal melanoma. In addition,
Aura received FDA Fast Track Designation for AU-011 for
the treatment of non-muscle invasive bladder cancer and
announced the first patient dosed in its Phase 1 study.
To support the ongoing clinical development of AU-011 in
bladder cancer as well as the pivotal Phase 3 study, Aura
raised $80 million through a public offering at $12 a share,
to finance the company through these clinical milestones.
Arix chose not participate given our significant existing
position.
Harpoon Therapeutics presented interim data from the
ongoing clinical trial of HPN328 demonstrating clinical
activity and a favourable safety profile in patients with
solid tumours. Harpoon also announced revised strategic
priorities for its pipeline, shifting focus to ongoing clinical
programs, HPN217, HPN328, and HPN601, to reduce
operating expense and to extend cash runway through the
end of 2023. Post-period end, we participated in a $25m
private placement round with a $3.5m (£2.8m) investment
to continue to support Harpoon with its ongoing clinical
trials.
Following its acquisition by Ensoma, Twelve Bio’s novel gene
editing technology is now well placed to progress as part
of the wider Ensoma platform. This is a testament for the
outstanding efforts by the Twelve Bio team. We are excited
to welcome Ensoma to the Arix portfolio and looking
forward to working together with the Ensoma team and
investors.
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10 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Depixus has made good progress since raising the Series A
in 2021 and the technology for developing their platform for
fast, accurate and straightforward extraction of multiomic
information from DNA, RNA and proteins, continues to
progress well as they approach significant milestones,
including prototype development and early preparation for
commercialisation.
Sorriso continued to advance its pipeline of anti-
inflammatory therapies through preclinical development
and is on track to start firstin-human trials over the course
of 2023.
Post period end we have been pleased to add another
company to the Core Portfolio with an $8.1m investment
into Evommune, a clinical stage company developing
treatments for chronic inflammatory disease. As I outlined
in my statement last year, we deliberately took a selective
approach to new private investments in 2022. We have
been following the Evommune story since inception and
were impressed at the progress the company made to
reach the high bar we set for new investments. Together
with the $3.5m (£2.8m) we invested in Harpoon’s March
2023 financing, this investment demonstrates our
commitment to continuing to support and develop the
portfolio where we see risk-adjusted opportunities for
significant capital growth.
The year ahead will be significant for a number of our
portfolio companies as they reach important clinical and
development milestones throughout 2023. Our portfolio
companies are collectively running 11 clinical trials, a
number of which are expected to read out over the next
12 months with the potential for value inflection if the
results are positive. There is already significant value in
these companies and with multiple clinical milestones on
the horizon, we see substantial growth potential across this
portfolio in the near future. In addition to clinical milestones,
there is potential for M&A activity, strategic partnerships
as well as other financing events across the portfolio, which
could greatly increase the value of our companies, and in
turn our NAV.
Active management of the portfolio
We actively manage our listed holdings and reduce our
positions where appropriate whilst retaining and in certain
cases, building our positions, where we have conviction
that we will see greater value in the future. We have been
reducing our exposure to legacy companies that have
become less compelling. During the period under review, we
sold our positions in Pyxis Oncology, LogicBio and Autolus,
generating £7.7m of aggregate proceeds. Outside of the
Core Portfolio, we also closed our position in GenSight.
Investment expertise
New additions to the Board in 2022 brought strength and
depth to our investment expertise, and we are fortunate
to benefit from a highly skilled investment committee to
complement our investment team. As we continue with the
resumption of our core investing activities, we will continue
to evolve our human resources to fit the needs of the
business. As part of this, I am delighted to welcome Tassos
Konstantinou to the Arix investment team as Managing
Director, following the departure of Mark Chin.
Outlook
As we move through 2023, we remain cautious about the
public markets and their appetite to support listed biotech
valuations and further fundraisings. This is likely to be
determined by the broader macro-outlook this year and will
require markets to see the peak of inflation and interest
rates before generalist investors will be comfortable pricing
risk for assets in our sector.
Despite these uncertain times, the factors driving growth in
the pharmaceutical industry remain unchanged: an ageing
population, a rising prevalence of chronic conditions, and
an increasing per capita spend on healthcare in developed
and emerging markets underscore the inherent value that
the sector has to offer. All of these factors serve to support
our founding purpose: to provide public market investors
with access to the abundant opportunities that exist within
the healthcare and life sciences industries through a liquid,
evergreen vehicle. For investors such as Arix, unlocking this
value requires recovery in the biotechnology sector markets
and an increase in licensing and M&A activity. We are
confident that the fundamentals will play through when
the macro challenges are no longer weighing as heavily on
the markets.
Robert Lyne
Chief Executive Officer
24 April 2023
Chief Executive Officer’s Review continued
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Market insight
A vibrant sector, transforming lives worldwide
The coming years are rich with
opportunity for companies in life sciences,
as a series of key drivers combine with the
continuing realities of the pandemic to
demonstrate the enormous value of the
sector – to investors, to economies and
ultimately to the health and wellbeing of
every person on our planet.
1 Scientific discovery continues at pace
Entrepreneurial scientists have changed the life science
landscape forever. Biotech innovation is shaping a new
understanding of the causes and dynamics of disease at
a molecular level – and this is driving an acceleration in
discovery. For example, the number of new clinical trials
added per year has increased from fewer than 11,000 in
2006 to more than 38,000 new trials initiated in 2022.
Therapeutic approaches are making new treatments
possible and transforming lives across therapeutic areas,
from oncology and inflammatory to infectious diseases.
2 The increased number of ongoing clinical trials is likely
to result in the development of breakthrough medicines
addressing high unmet needs and underserved disease
areas. Amongst new 2022 drug approvals was UK-based
ImmunoCore’s Kimmtrak, a bispecific T cell engager protein,
that was approved for unresectable or metastatic uveal
melanoma. Moreover, in August 2022 bluebird bio’s Zynteglo
became the first FDA-approved stem cell-based gene
therapy for patients with ß-thalassemia. The year 2022 also
saw emerging developments in the radiopharmaceutical
space. Novartis’s Pluvicto was approved in March for
prostate-specific membrane antigen-positive metastatic
castration-resistant prostate cancer. 2022 also saw a
number of approvals in the metabolic space, an area of
increasingly high medical need. The first new drug to slow
the onset of type 1 diabetes, Provention Bio’s Tzield, was
approved in November 2022. This anti-CD3 monoclonal
antibody binds to T lymphocytes and dampens their attack
on insulin-producing pancreatic beta cells.
3 Demographics are driving demand
The world’s population is growing older and living longer – and
with that trend comes an inevitable increase in the prevalence
of chronic diseases. Cardiovascular, cancer and neurological
conditions are the biggest killers on the planet, and all three
are diseases of ageing. In the US, EU and Japan the number
of people aged over 65 is expected to double from 200 million
to 400 million in the next decade. The pattern repeats in the
emerging markets, where increased longevity is matched
by a growing middle class able to afford medical care. In
China, Brazil, India and Russia, the average total number
of prescriptions filled per year has doubled since 2009 and
continues to rise. While economies go through cycles, demand
for treatments increases inexorably – this is a long-term
defensive sector, with great resilience to other factors.
4 The regulatory environment is increasingly favourable
Scientists are now more effective at evaluating targets and
selecting the appropriate patients than ever before – and
this has led to more products successfully navigating the
approvals process, to the benefit of companies, investors
and patients alike. For example, in 2007 only 18 new drugs
were approved by the FDA, the US approval authority.
However, between 2012 and 2021 the FDA approved on
average 44 drugs per year. In 2022, 37 new drugs were
approved, which marks a 26% decrease from the 50 drug
approvals in 2021, but notably this temporary decrease may
be a result of trial delays as well as trials discontinuations
that were a result of the Covid-19 pandemic in 2020 and
2021. Notably, taking into account a number of impactful
FDA approvals post period end in early 2023, it becomes
apparent that the biotech industry remains strong to
deliver new medicines and we remain highly optimistic that
the number of drug approvals will increase again.
5 The route to exit is clear
Our role is to invest in young companies, position them for
growth and reap the rewards for our investors when these
bright, successful companies are acquired, often by Big
Pharma. In the last ten years, the average amount invested
by venture capital companies in biotech businesses has
remained broadly flat at around $50 million per company.
However, the average total exit value has risen from
approximately $200 million to $561 million in the same
period, demonstrating significant and increasing returns
on investment. There is also a trend for pharmaceutical
companies to compete with each other and agree deals at
an earlier stage – and with smaller and younger companies.
In the recent past, larger pharmaceutical companies
focused primarily on products in phase two or three of
clinical trials. Today, they are acquiring companies involved
in phase one or even those still working in the pre-clinical
stage. It is interesting to note that companies acquired at
the early stages of clinical development often generate
higher return multiples than later stage companies.
37
New drugs approved by
the FDA in 2022
55%
Novel drug approvals
originated by smaller
biopharma companies
between 2011-2021
38,035
Increase in the number of
clinical trials in 2022
$78bn
Value of Biotech
companies acquired in
2022
Sources: FDA, clinicaltrials.gov, SVB Leerink, Nature Publishing.
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12 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Our Investment strategy
Investing in life changing science
Our goal is to make a tangible difference to patients’ lives and generate superior returns for shareholders,
by investing in innovative biotech companies addressing areas of unmet needs in healthcare.
Our focus: We focus on true innovation and partner with the most experienced entrepreneurs, management
teams and investors to develop treatments that can significantly improve patients’ lives.
High impact innovation
Invest in breakthrough therapies which have the potential
to revolutionise patient outcomes.
Focused Geographies
Source primarily from the USA and Europe, areas with
world-leading science and biotech ecosystems in which we
have strong networks.
Therapeutics focus
Novel therapeutics with first or best-in-class approach,
focusing on therapeutic areas with high unmet need,
significant market opportunity and a disease and
mechanism of action which are well understood.
Clinical and late pre-clinical opportunities
Investing into assets which are partially de-risked with
near-term value inflexion points of clinical progress with the
potential for valuation uplifts and exits.
Our approach
We focus purely on life sciences, with a team that is
highly experienced in this sector. We aim to remain at the
forefront of new exciting therapeutic areas by anticipating
hot areas across the biotech and life science sectors and by
identifying the most promising investment opportunities
early. We invest in true innovation and disease areas where
in our belief, the most opportunity exists to advance new
treatment options for patients.
We have a global network across top tier biotech
investors and world-leading management teams with a
proven track record of success in biotech. This network
of excellence ensures that we have access to top tier
syndicates and premier deals across Europe and the US.
We have a renowned group of advisors, including serial drug
developers and biotech executives, who aid in the sourcing
and assessment of potential investment opportunities.
We take a proactive approach when we invest, frequently
either leading or co-leading financing rounds and joining the
board of portfolio companies. We can help secure funding,
develop business strategy, make connections and recruit
experienced and talented management teams.
How we allocate capital and manage risk
Private venture
To minimise risk, we focus on investments into later stage
private companies which are already conducting clinical
trials. The majority of these companies are clinical stage
and have begun testing their treatments in patients. These
companies will have at least one live clinical trial, in either
Phase 1, Phase 2 or Phase 3 and have raised significant
capital, supported by a strong syndicate of leading venture
investors.
We also retain the flexibility to invest in companies which
are late pre-clinical. These companies would have the goal
of advancing their lead asset into clinical development
within 12 to 18 months of investing. As these companies
are not yet assessing their drug candidates in patients,
these opportunities are of higher translational risk and
therefore we allocate a minority of our capital to such
opportunities. However, the increased risk is typically offset
by greater return multiples than late-stage investments.
We minimise that risk by investing into clinically de-risked
programmes based upon well-understood biology. Sorriso
Pharmaceuticals is a recent example of such an investment.
PIPE (Private Investment in Public Equity)
Whilst the majority of our investments are into private
biotech companies, the public markets can offer investment
opportunities at attractive valuations. By investing through
structured PIPE transactions, we can act as a catalyst to
provide funding for and unblock opportunities in clinical
stage public companies with depressed valuations. These
businesses will typically have clinical readouts within 18
months of our investment. Their public status provides a
mechanism for the re-rating of our investment in short
order when clinical read-outs are published, as well as
liquidity to return funds to our balance sheet.
Types of companies we invest in
New investments are predominantly made into private
biotech companies. However, we do have the flexibility
to invest in public companies, if we believe there is the
potential to make significant investment returns.
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Business model
How we create sustainable value
6. Reinvest
Capital is recycled onto the
balance sheet for reinvestment
3. Invest
Invest in innovation with a clear
commercial pathway, approx
1 out of every 90 seen
1. Discover
We source globally and review
hundreds of companies each year
2. Evaluate
Rigorous due diligence for new and
follow-on investments
5. Exit
We take a long-term view and
seek to exit when the optimum
value is reached
4. Develop
We typically take a board seat
and play an active role to help our
companies grow
For portfolio companies
• Flexible, long-term capital.
• Deep industry and capital
markets expertise.
• Access to a broad range of
co-investment opportunities.
• Introduction to potential
acquisition targets.
• Due diligence and company building
support.
For society
• We invest in companies that address
serious unmet needs in healthcare
and have the potential to transform
patient outcomes.
• New company creation and job
creation.
For shareholders
• Investing in a business that has
a meaningful impact on society.
• A diverse portfolio of opportunities
and exposure to disruptive,
high-growth biotech companies.
• Financial returns.
• Balanced portfolio.
For employees
• Employee engagement.
• Talent development.
• Working for a business that helps
create companies which address
serious unmet needs in healthcare.
Key strengths and resources
Value created and shared
• Integrity.
• Respect.
• Transparency.
• Discipline.
• Collaboration.
• Accountability.
Underpinned by our values
Diversity, equity and inclusion
At Arix we take great pride in our small team of employees and our Board who work tirelessly to deliver value for
our shareholders. As we expand the team, we continue to deepen our commitment to Diversity & Inclusion by
ensuring we have a diverse selection of candidates to choose from with a focus on building a diverse culture and
gender balance. At the end of the reporting period, two of our Board members were female and five members were
male, and the Board keep our Board Diversity policy under regular review. The Company had nine employees
(including contractors) at the end of the reporting period, of which four were female and five were male. One male
holds a managerial position within the Company.
14 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Our strategic objectives
Discover
high impact innovation in areas of
unmet need, with the potential to deliver
transformative treatments to patients
Develop
and build the value of these companies
through hands-on support
Deliver
double digit NAV growth
Performance in 2022
• Provided £11.1m new capital to Core
Portfolio companies.
• Up to £22.5m available for a new
strategy of diversifed investments in
undervalued public companies.
£33.6m
capital deployed
Performance in 2022
• $134m of capital raised by portfolio
companies.
• New clinical trials initiated by Artios
and Disc Medicine in the period.
• Twelve Bio acquired by Ensoma
alongside concurrent financing in which
Arix participated.
$134m
capital raised by portfolio companies
Performance in 2022
• NAV decreased by 11% to £226m
(175p per share).
• £30.8m cash realised from Core
Portfolio during the year.
• Share price decreased by 11.9%.
• Cost base run-rate below 2% NAV.
£20.8m
capital realised
Priorities going forward
• Maintain exposure to quality life
science opportunities across the globe.
Priorities going forward
Increase value of portfolio companies
through hands-on support including:
• Raising capital.
• Clinical development.
• Management search.
• Business strategy.
• Developing strategic interest.
Priorities going forward
• Targeting a cost run rate within 2%
of Net Asset Value under normal
market conditions.
• Targeting double digit NAV growth.
Link to KPIs
• Diverse portfolio.
• Active clinical pipeline.
Link to KPIs
• NAV growth.
• Capital pool.
Link to KPIs
• NAV growth.
• TSR.
• Capital pool.
Our goal is to make a tangible difference to patients’ lives and generate superior returns for shareholders,
by investing in innovative biotech companies addressing areas of unmet needs in healthcare.
To generate superior returns for investors and to make a tangible difference to patients’ lives by investing in a
focused portfolio of innovative biotechnology companies addressing areas of high unmet need in healthcare.
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Key performance indicatorsKey performance indicators
Financial KPI Description/rationale Performance 2022 Links to strategic goals Link to risks
1
NAV growth
Includes performance of
portfolio companies
and capital pool.
• 11% decline in NAV in
2022 (22% decline in
2021)
DISCOVER high impact
innovation in areas of unmet
need, with the potential
to deliver transformative
treatments to patients
DEVELOP and build the
value of these companies
through hands-on support
DELIVER attractive returns
to shareholders
1 532 64
2
Total
Shareholder
Return
Measures performance
of delivering value to
shareholders. As no
dividend were declared
during the period, TSR
is calculated solely on
change in share price.
• Share price decreased
from 122p to 107.5p in
2022
• TSR decrease of 11.9%
DELIVER attractive returns
to shareholders
1 532 64
3
Capital pool
Maintain sufficient
capital to support
growth of portfolio
companies and
take advantage of
new investment
opportunities.
• £122.8m of cash and
cash equivalents
DISCOVER high impact
innovation in areas of unmet
need, with the potential
to deliver transformative
treatments to patients
DEVELOP and build the
value of these companies
through hands-on support
DELIVER attractive returns
to shareholders
1 532 64
Non-financial KPI Description/rationale Performance 2022 Links to strategic goals Link to risks
4
Robust and
active clinical
pipeline
Measures number of
clinical trials across
the portfolio, with
the potential to
deliver important new
treatments to patients.
• 11 clinical programmes DISCOVER high impact
innovation in areas of unmet
need, with the potential
to deliver transformative
treatments to patients
DEVELOP and build the
value of these companies
through hands-on support
1 6
5
Diverse
and broad
portfolio
Measures Arix’s
commitment to invest in
the best opportunities
worldwide, across
different stages of
development and
therapeutic areas.
• 9 companies in Arix’s
Core Portfolio
DISCOVER high impact
innovation in areas of unmet
need, with the potential
to deliver transformative
treatments to patients
41 62
1
Clinical trial risks
2
Unlisted investments
3
Taxation
4
Personnel
5
Macroeconomic conditions
6
Legislation and Regulation
KEY
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16 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
At year end, our portfolio companies
were collectively running 11 clinical trials
and conducting 9 pre-clinical studies,
providing Arix with multiple shots on goal
for value creation.
Overall, the portfolio made good progress in 2022, with
several companies reaching important clinical milestones
and securing financing, as detailed below.
Operationally, there was continued progress across the
portfolio. Disc Medicine announced positive Phase 1 data
of DISC-0974 in healthy volunteers, thus de-risking further
clinical development and paving the way for Phase 2
studies. Based on the successful Phase 1 trial, Disc initiated
a Phase 1b/2 clinical trial of DISC-0974 in myelofibrosis
patients with severe anemia. In addition, Disc started two
Phase 2 studies of bitopertin in patients with erythropoietic
protoporphyria and X-linked protoporphyria, respectively.
Disc completed a merger with Gemini Therapeutics to
create a NASDAQ-listed company with sufficient financing
through all upcoming clinical data readouts.
Our portfolio company Artios Pharma advanced its two
clinical-stage assets through clinical trials and entered
Phase 2 clinical development. For the first time Artios
announced clinical data from human studies, highlighting
encouraging safety and early signs of clinical activity.
Notably, one of the initiated clinical trials is a Phase 2 study
with Pol0 inhibitor, ART4215, in combination with Pfizer’s
PARP inhibitor talazoparib in patients with BRCA deficient
breast cancer.
Aura Biosciences presented positive interim data from
its ongoing Phase 2 trial evaluating suprachoroidal
administration of AU-011 for the first-line treatment of
patients with early-stage choroidal melanoma. The data
showed encouraging efficacy as well as safety. Based
on this data, Aura aligned with regulatory agencies and
finalized the design of the planned global Phase 3 trial.
The trial will evaluate the efficacy and safety of AU-011
with suprachoroidal administration, for the first-line
treatment of early-stage choroidal melanoma. In addition,
Aura received FDA Fast Track Designation for AU-011 for
the treatment of non-muscle invasive bladder cancer and
announced the first patient dosed in its Phase 1 study.
To support the ongoing clinical development of AU-011 in
bladder cancer as well as the pivotal Phase 3 study Aura
did a public offering to finance the company through these
clinical milestones.
Harpoon Therapeutics presented interim data from the
ongoing clinical trial of HPN328 demonstrating clinical
activity and a favourable safety profile in patients with
solid tumours. Harpoon announced revised strategic
priorities for its pipeline, shifting focus to ongoing clinical
programs, HPN217, HPN328, and HPN601, to reduce
operating expense and to extend cash runway through the
end of 2023. Post period end, Arix participated in a $25m
private placement round with a £2.8m ($3.5m) investment
in redeemable preferred stock to continue to support
Harpoon with its ongoing clinical trials within the current
subdued markets.
Following period end, Twelve Bio announced that it entered
into a definitive agreement to be acquired by Ensoma, a
Boston-based genomic medicines company developing one-
time
in vivo
treatments that precisely engineer any cell of
the hematopoietic system. A concurrent Series B financing
for Ensoma was announced on the same day and included
Arix Bioscience as a co-lead investor. The Twelve Bio team
had made continuous progress to advance its novel gene
editing technology and the acquisition by Ensoma is a
testament for the outstanding efforts by the Twelve Bio
team. We are also excited to welcome Ensoma to the Arix
portfolio and looking forward to working together with the
Ensoma team and investors.
Another deal completed post period end was Evommune,
a clinical stage company developing therapeutics for the
treatment of chronic inflammatory disease. Evommune
has four programmes under development, one of which
is already in the clinic and targeting patients with atopic
dermatitis, a common form of eczema with a large
potential patient opulation. The company is lead by
Luis Pena, who cofounded Dermira and served as Chief
Development Officer before it was acquired by Eli Lily. Arix
contributed £6.6m ($8.1m) to the round which will see the
funds progress their programs through the clinic.
The year ahead will be significant for a number of our
portfolio companies as they reach important clinical and
development milestones throughout 2023. Our portfolio
companies are collectively running 11 clinical trials, a
number of which are expected to read out over the next
12 months with the potential for value inflection if the
results are positive. There is already significant value in
these companies and with multiple clinical milestones on
the horizon, we see significant growth potential across this
portfolio in the near future. In addition to clinical milestones,
there is potential for M&A activity, strategic partnerships,
and other financing events across the portfolio, which could
greatly increase the value of our companies, and in turn our
NAV.
Portfolio review
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Portfolio review continued
An overview of 2022 in numbers
$134m
raised by portfolio companies in the year
11
clinical trials across the portfolio at year end
1
new addition to the portfolio
1
portfolio company acquisition
1
Reverse merger by a portfolio company on NASDAQ
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18 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Across our portfolio at year-end we have 11 studies in the clinic, focusing on areas of high unmet medical need.
Company Programme Indication Clinical Stage
Expected next
steps in 2023
Aura AU-011 Choroidal melanoma (IVT*) Phase 2 Completion
Aura AU-011 Choroidal melanoma (SC**)
Phase 2 Phase 3 initiation
Artios
ART4215 +
talazoparib Breast cancer Phase 2 Ph2 data in 2024
Disc Medicine Bitopertin Erythropoietic porphyria
Phase 2 Phase 2 data
Disc Medicine Bitopertin X-linked Protoporphyria
Phase 2 Phase 2 data
Harpoon HPN328 Small cell lung cancer
Phase 1 Phase 1/2 data
Harpoon HPN217 Multiple myeloma
Phase 1 Phase 1/2 data
Artios ART0380 Advanced or metastatic solid tumours
Phase 1 Phase 1 data
Artios ART4215 Advanced or metastatic solid tumours
Phase 1 Phase 1 data
Disc Medicine DISC-0974 Myelofibrosis
Phase 1 Phase 1/2 data
Aura AU-011 Non-muscle invasive bladder cancer
Phase 1 Phase 1 data
Multiple undisclosed preclinical programmes
Preclinical – At this stage, the focus is on researching the feasibility and safety of a treatment before commencing clinical trials.
Phase 1 – This is the first time a product is tested in humans. The focus at this stage is testing the side effects and safety.
Phase 2 – Phase 2 involves further trials testing the efficacy and safety and different dosing levels.
Phase 3 – This is the final stage of testing before registration. Phase 3 trials focus on testing the effectiveness of the new
product compared to existing treatments or to a placebo.
* Intravitreal
** Suprachoroidal
Broad and rich clinical pipeline
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Artios Pharma Limited
Artios is a leading independent DNA Damage Response
(DDR) company with a strong pipeline of novel cancer
therapies in development with first-in-class potential.
Therapeutic area: Oncology Phase
2
Original cost: £20.2m
Holding value: £24.9m
% of Gross Portfolio: 24.9%
The year of 2022 was a successful year for Artios as it
advanced its two clinical-stage assets through clinical trials
and entered Phase 2 clinical development. Artios announced
initial positive data from the Phase 1a study with its small
molecule ATR inhibitor, ART0380, in patients with advanced
or metastatic solid tumours in April 2022. The Phase 1a
data demonstrated a predictable safety profile, preliminary
clinical activity, and supported the initiation of a Phase 1b
dose expansion study targeting ATM deficient tumours.
Based on the encouraging initial Phase 1b data, Artios
announced, post period end, in February 2023 the initiation
of a Phase 2 randomised trial for ART0380 in combination
with gemcitabine in patients with platinum resistant
ovarian cancer. Preliminary Phase 2 data will become
available in 1H 2025.
The company initiated a Phase 2 study of its Pol0
inhibitor, ART4215, in combination with the PARP inhibitor
talazoparib in patients with BRCA deficient breast
cancer. Phase 1 safety and tolerability data for ART4215 in
advanced solid tumours is expected in 1H 2023 and Phase 2
data in BRCA deficient breast cancer patients is expected
in 2024.
Artios further expanded its board with the appointment
of Samantha Truex, a seasoned biotechnology executive, in
June 2022.
Aura Biosciences (NASDAQ: AURA)
Aura is a biopharmaceutical company developing a new
class of oncology therapies based on the combination of a
viral like particle with high affinity to tumour cells coupled
to a laser-activatable dye.
Therapeutic area: Oncology
Phase
2
Original cost: £11.5m
Holding value: £13.1m
Realised to date: £2.7m
% of Gross Portfolio: 13.2%
Aura’s drug binds to malignant tumour cells with high
specificity and once the dye is activated by a short laser
treatment there is an acute tumour cell necrosis. AU-11,
Aura’s lead asset, is being developed for the first line
treatment of indeterminate lesions and small choroidal
melanoma, a life and vision threatening and rare disease
with no approved therapies besides radiation.
During the period, Aura presented positive interim data
from its ongoing Phase 2 trial evaluating suprachoroidal
administration of AU-011 for the first-line treatment of
patients with early-stage choroidal melanoma. The data
showed encouraging efficacy as well as safety. Based
on this data, Aura aligned with regulatory agencies and
finalised the design of the planned global Phase 3 trial. The
trial will evaluate the efficacy and safety of AU-011 with
suprachoroidal administration, for the first-line treatment
of early-stage choroidal melanoma.
The company also reported topline data from a
retrospective study of AU-011 versus plaque radiotherapy
supporting the value of a vision preserving therapy for
the treatment of patients with early-stage choroidal
melanoma. AU-011 demonstrated statistically significant
vision preservation compared to the current standard
of care, which highlights the potential clinical benefit of
Aura’s therapy for patients. Aura also announced that the
European Commission granted Orphan Drug Designation
to AU-011 for the treatment of uveal melanoma, which
includes choroidal melanoma.
In addition, Aura received FDA Fast Track Designation for
AU-011 for the treatment of non-muscle invasive bladder
cancer and announced the first patient dosed in its Phase 1
study.
Notably, Aura announced the pricing of a public offering
of Common Stock in November 2022, sufficient to finance
the company through the global Phase 3 study in choroidal
melanoma.
Core Portfolio
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20 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Disc Medicine
Disc Medicine is a clinical-stage biopharmaceutical company
that is dedicated to transforming the lives of patients with
hematologic disorders.
Therapeutic area: Hematology Phase
2
Original cost: £8.1m
Holding value: £9.0m
% of Gross Portfolio: 9.0%
In mid-2022, Disc announced positive Phase 1 data of DISC-
0974 in healthy volunteers. The clinical trial demonstrated
good safety, pharmacokinetics and encouraging effects
on hepcidin levels as well as iron metabolism. Importantly,
DISC-0974 achieved robust increases in serum iron
and hemoglobin. Based on the successful Phase 1 trial,
Disc initiated a Phase 1b/2 clinical trial of DISC-0974 in
myelofibrosis patients with severe anemia in June 2022.
In August 2022, Disc initiated two Phase 2 studies of
bitopertin in patients with erythropoietic protoporphyria
(EPP) and X-linked protoporphyria (XLP), respectively.
During the period, Disc announced a merger agreement
with Gemini Therapeutics to create a NASDAQ-listed
company focused on advancing Disc’s clinical pipeline.
A concurrent financing of $53.5m restricted to Disc’s
existing investors was announced alongside the merger.
The combined cash provides Disc with financial runway
into 2025. The completion of the merger was announced in
December 2022, when Disc started to trade on the Nasdaq
Global Marker under the ticker symbol IRON.
Disc appointed Jay Backstrom to its board of directors and
Rahul Khara as General Counsel.
Depixus
Depixus is developing technology for the fast, accurate,
and inexpensive extraction of genetic and epigenetic
information from single molecules of DNA and RNA.
Therapeutic area: Genetic diseases
Original cost: £4.6m
Holding value: £8.2m
% of Gross Portfolio: 8.3%
Having closed the Series A financing in December 2021,
during the period, the company has continued to make
good progress and plans to provide further updates in 2023.
Imara (NASDAQ: IMRA)
In April 2022, Imara announced interim results of IMR-
687 Phase 2b clinical trials in SCD and beta-thalassemia.
Interim results in the Ardent trial for SCD showed no
significant difference in median annualized rate of vaso-
occlusive crises in high-dose groups versus placebo in an
intent-to-treat population. Interim results in the Forte
trial for beta-thalassemia demonstrated no significant
benefit in transfusion burden or improvement in most
disease-related biomarkers. IMR-687 was generally well
tolerated across studies. Based on results from both Phase
2b clinical trials, further development of IMR-687 in SCD
and beta-thalassemia was discontinued. To preserve cash,
the company reduced staff by >80% and a minimal core
management team decided to evaluate, together with
the Board of Directors the best way forward to maximise
returns for existing shareholders.
Therapeutic area: Genetic diseases Phase
2
Original cost: £19.6m
Holding value: £7.8m
Realised to date: £7.3m
% of Gross Portfolio: 7.8%
In October 2022, Imara and Enliven Therapeutics
announced a merger agreement to create a Nasdaq-
listed, clinical-stage biopharmaceutical company focused
on advancing Enliven’s portfolio of precision oncology
programs. Enliven is advancing two parallel lead product
candidates: ELVN-001, a highly selective small molecule
BCR-ABL inhibitor for the treatment of chronic myeloid
leukemia, and ELVN-002, a potent, selective and irreversible
HER2 and pan-HER2 mutant kinase inhibitor for the
treatment of HER2 mutant lung cancer and other HER2-
driven tumor types. Upon completion of the merger, which
is subject to approval by Imara’s and Enliven’s stockholders,
the combined company is expected to operate under the
name Enliven Therapeutics, Inc. and trade on the Nasdaq
Global Select Market under the ticker symbol ELVN.
In support of the merger, Enliven also intends to raise
approximately $165m in a concurrent private financing.
The combined company is expected to have a cash balance
of approximately $300m at close, which is expected to
provide cash runway through multiple clinical milestones
and into early 2026.
Core Portfolio continued
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Core Portfolio continued
Sorriso Pharmaceuticals
Sorriso is a biotechnology company advancing a pipeline
of disease-modifying antibodies for the treatment of
inflammatory diseases, including Crohn’s disease and
ulcerative colitis.
Therapeutic area: Immunology
Preclinical
Original cost: £6.0m
Holding value: £6.6m
% of Gross Portfolio: 6.62%
During the period the company has made good progress
preparing for initiation of Phase 1 clinical development in
2023. The company remains on track to enter clinical trials
in 2023.
Sorriso has made key additions to its team to strengthen
its leadership. The company appointed Jeffrey W. Sherman,
Chief Medical Officer and Executive Vice President at
Horizon Therapeutics, to its board of directors. In addition,
Jackie Benson, former Vice President of Immunology
Scientific Innovation at Johnson & Johnson, joined Sorriso
as Chief Scientific Officer.
Twelve Bio
Twelve Bio is developing a gene editing platform based
on CRISPR-Cas12a variants for the treatment of genetic
diseases with high unmet medical need.
Therapeutic area: Genetic diseases
Discovery
Original cost: £3.5m
Holding value: £5.0m
% of Gross Portfolio: 4.8%
During the period, Twelve Bio has made continuous
progress to advance its CRISPR-Cas12a toolbox. Following
period end, on 5 January 2023, Twelve Bio announced that
it entered into a definitive agreement to be acquired by
Ensoma, a Boston-based a genomic medicines company
developing one-time
in vivo
treatments that precisely
engineer any cell of the hematopoietic system. A concurrent
Series B financing for Ensoma was announced on the same
day, and included Arix Bioscience as a co-lead investor.
Closing of the acquisition of Twelve Bio by Ensoma was
announced on 9 February 2023.
STipe Therapeutics
STipe is developing first-in-class drugs that sensitize the
STING pathway, a major driver of innate immunity, to
enable a patient’s immune system to overcome the immune
suppression often observed within solid tumours.
Therapeutic area: Oncology
Preclinical
Original cost: £5.0m
Holding value: £1.3m
% of Gross Portfolio: 1.3%
STipe has a differentiated approach from other
programmes targeting the STING pathway since it does
not rely on direct overstimulation and therefore has the
potential to be a systemically delivered therapy with
broader applications.
STipe continues its preclinical work on the lead program,
however based upon the challenging funding environment
for preclinical companies such as STipe, we have taken
a view to further adjust the holding of value of STipe
following the write down at the half year, as at year-end
the holding value is £1.3m.
Harpoon Therapeutics (NASDAQ: HARP)
Harpoon is a clinical-stage immunotherapy company
developing a novel class of T cell engagers that harness
the power of the body’s immune system to treat patients
suffering from cancer and other diseases.
Therapeutic area: Oncology Phase
1/2
Original cost: £20.5m
Holding value: £1.3m
Realised to date: £12.5m
% of Gross Portfolio: 1.33%
During the period, Harpoon received FDA Fast Track
Designation for HPN217 for the treatment of patients
with relapsed, refractory multiple myeloma. In November
and December 2022, Harpoon presented interim results
from the Phase 1 trial of HPN217 in heavily pretreated
patients with relapsed/refractory multiple myeloma. This
data established a clinical proof of concept, demonstrating
strong as well as durable efficacy and favorable safety.
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22 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Moreover, Harpoon was granted Orphan Drug Designation
for HPN328 for the treatment of small cell lung cancer.
Notably, Harpoon and Roche announced a collaboration on
clinical trials to study HPN328 in combination with the anti-
PD-L1 antibody atezolizumab in patients with small cell lung
cancer. In May 2022 Harpoon presented interim data from
the ongoing dose escalation of HPN328. The data showed
clinical activity and a favourable safety profile in patients
with solid tumours.
In November 2022, Harpoon announced revised strategic
priorities for its pipeline. The company noted its strategic
realignment to focus resources on ongoing clinical
programs, HPN217, HPN328, and HPN601. This step
involved a restructuring in workforce to support prioritized
clinical development and resulted in reduced operating
expense, and an extended cash runway through the end of
2023.
On a corporate level, Harpoon announced the departure of
Chief Medical Officer Natalie Sacks and later in the period
announced the expansion of its leadership team with the
appointment of Wendy Chang to SVP HR, Banmeet Anand
to SVP Translational Medicine, and Luke Walker to Chief
Medical Officer. In addition, Harpoon appointed Lauren
Silvernail, a highly experienced industry veteran, to its board
of directors.
Pyxis Oncology (NASDAQ: PYXS)
Pyxis Oncology is building a differentiated portfolio
of biologics, including antibody-drug conjugates and
immunotherapies, to improve the lives of patients with
difficult-to-treat cancers.
Therapeutic area: Oncology
Original cost: £14.5m
Holding value: £0.0m
% of Gross Portfolio: 0%
Arix fully exited its position in Pyxis Oncology in 2022 at a
loss of £10.3m against original cost.
LogicBio Therapeutics (NASDAQ: LOGC)
LogicBio Therapeutics is a genome editing company,
dedicated to extending the reach of genetic medicine with
pioneering targeted delivery platforms.
Therapeutic area: Genetic diseases Phase
1
Original cost: £13.3m
Holding value: £0.0m
Realised to date: £2.1m
% of Gross Portfolio: 0.0%
Arix fully exited its position in LogicBio in 2022.
Autolus (NASDAQ: AUTL)
Autolus is developing next-generation programmed T cell
therapies for the treatment of cancer.
Therapeutic area: Oncology
Original cost: £24.6m
Holding value: £0.0m
Realised to date: £1.6m
% of Gross Portfolio: 0.0%
Arix fully exited its position in Autolus in 2022.
Core Portfolio continued
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Public Opportunities Portfolio
Public Opportunities Portfolio
2022 continued to see a significant disconnect between
public and private valuations for biotechnology companies.
This led Arix to deploy capital into a range of public market
investments which met the same criteria as our private
investments, but offered significant value given the
unwarranted shift in sentiment against these companies.
Original cost: £13.6m
Holding value: £13.5m
% of Gross Portfolio: 13.6%
Each of the companies selected for the Public
Opportunities Portfolio (POP) is a clinical stage drug
development company with near-term clinical trial read-
outs and the potential for acquisition by big pharma.
Whilst this is consistent with our investment philosophy
for private companies, the liquid nature of public market
investments allows for dynamic trading of these positions
which are deliberately kept at a size which allows for
rapid liquidation. By comparison, our Core Portfolio
public holdings are inevitably prone to illiquidity due to
the significant percentage holdings we have as a legacy
of being a pre-IPO investor. Whilst these Core Portfolio
positions provide significant exposure to potential big wins,
the Public Opportunities Portfolio provides a more balanced
opportunity for us to generate value from volatile markets.
A successful example of one of our POP selections has
been Ventyx Biosciences which we first invested in during
July 2022. At the time of first investing, Ventyx’s pipeline
included three clinical-stage programs targeting TYK2,
S1P1R and NLRP3, all of which are clinically validated
targets that have strong prospect of becoming impactful
oral therapies in the immunology space. It was the
TYK2 program as well as the strong cash position and
experienced Ventyx team that attracted Arix to this
investment. We viewed the wholly owned TYK2 inhibitor
as a potential best-in-class agent that could differentiate
from Bristol-Myers Squibb (BMY) and others. Therefore,
we viewed BMY’s imminently expected deucravacitinib
approval by the FDA as well as Ventyx’s near-term Phase
1 safety/tolerability and PK/PD data in early Q3 2022
as potential positive catalysts. In August 2022, Ventyx
presented highly encouraging Phase 1 data for its TYK2
inhibitor and in September 2022, the FDA approved BMY’s
deucravacitinib without a black box warning. Given the
significant return that resulted from this positive news,
we decided to partially sell down our position in Q4 2022,
however, we remain excited about the return prospect of
the stock.
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24 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
2022 highlights
Net Asset Value (NAV)
£226m
2021: £255m
Read more on our NAV growth, TSR and capital pool KPIs on page 15.
At year end, NAV totalled £226 million, a decrease of £29.5
million, or 11%, compared to 2021’s £255.4 million. The loss
for the year was £27.6 million (2021: loss of £61.1 million),
while cash decreased by 8.5% to £122.8 million (2021:
£134.2 million) per note 16, following net investments made
of £12.8 million, and operational cash movements.
2022 saw a more challenging macro-economic environment
than we had hoped for at the start of the year. The war
in Ukraine has exacerbated inflationary pressures leading
central banks to tighten monetary policy and increase
the cost of capital. This has contributed to the challenges
facing biotech companies seeking funding during the period
and has kept pressure on public valuations. Nonetheless,
the portfolio is well funded as we enter 2023, with Core
Portfolio companies Aura Bioscience and Disc Medicine
having collectively raised $133.9m on the public markets in
the second half of 2022.
Portfolio revaluations
The value of Gross Portfolio (see table below), including
investments and realisations in the year, reduced by
£18.6million to £99.6 million predominantly as a result
of downward movement in the public assets. This was
driven by a further decrease in the value of Harpoon by
£10.9million.
In the private portfolio, a further write down of STipe
Therapeutics (£1.3 million) was partially offset by a 20%
increase in our holding in Twelve Bio to £1.2 million. This was
as a result of Twelve Bio’s all share transaction-acquisition
by Ensoma and the resultant conversion of an outstanding
Twelve Bio convertible loan to 20%.
Portfolio realisations
During the year we continued to exit certain legacy public
positions. This resulted in the complete exit from Autolus,
LogicBio and Pyxis generating £7.7 million of aggregate
proceeds. There was also a modest realisation from Aura
in the first half of 2022 when the stock was trading well,
generating £1.2m of proceeds and leaving a significant
remaining position for Arix.
Portfolio investment
As outlined at the start of 2022, we expected capital
deployment to be reduced and refocused on the Public
Opportunities Portfolio. This was reflected in only one new
company being added to the portfolio with the financing
of £7.5m into Ensoma alongside its acquisition of existing
portfolio company Twelve Bio.
The focus of new capital deployment was into the Public
Opportunities Portfolio which began in February 2022. This
is a dynamic portfolio which adjusts to conditions in the
market as well as individual opportunities. At its peak there
was £22.5 million invested in this portfolio. By year end, the
value of the holdings in the Public Opportunities Portfolio
was £13.5 million.
Foreign exchange
The GBP/USD exchange rate fell during 2022. Starting
at $1.35 it declined to $1.11 in September 2022, before
recovering to $1.21 by the year end. This resulted in a
modest net negative impact of £3.45 million on portfolio
valuations with the majority of Arix’s investments being
denominated in US dollars.
Arix continues to expect that the majority of future
investment cash flows, both in and out, will be in US dollars
and as such, does not consider hedging strategies to be
appropriate at this time, particularly given the uncertainty
over the quantum and timing of these movements.
Cash and deposits
With a cash balance of £122.8 million per note 16 at
31 December 2022, Arix has a very strong capital pool
to support both the current portfolio and new biotech
opportunities.
Counterparty risk is managed by holding cash across
financial institutions, all of which have a credit rating of
at least F1, according to Fitch ratings. Returns on cash
have been historically low but Arix continues to target yield
where possible, weighed against the anticipated timing
and quantum of the needs of the portfolio. The Company’s
Treasury Policy is overseen by the Audit and Risk Committee.
Net operating costs
2022 saw continued control of costs which have been
reduced significantly in recent years. Net operating costs
were £8m in 2019, £6.9m in 2020 and £6.6m in 2021. Cost
reduction began in 2021 following management changes,
with £1.49m of exceptional changes taken that year in
relation to shareholder engagement and restructuring. For
2022, net operating costs were £3.5 million, representing
1.5% of 2022 NAV, below the 2% target.
Fund management fee income of £0.01 million, (2021:
£0.3m) received from managing The Wales Life Sciences
Investment Fund, continues to reduce in line with
expectation as the fund reached the end of its tenure in
February 2023.
Finance income of £1.6 million was generated in the
year reflecting the significantly increased interest rate
environment compared to £0.1m last year when interest
rates were considerably lower.
Financial review
Year ended 31 December 2022
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Financial review continued
The share–based payment was a charge in the year
of £0.3m compared to the credit in the previous year
(£0.3million).
Taxation
As a UK operating group, Arix is subject to UK corporation
tax on the majority of its activities, which can include
the gains arising on investments. However, wherever
possible we aim to take advantage of the UK’s Substantial
Shareholding Exemption (SSE), which exempts taxable
gains or losses arising from the disposal of shares, where
certain conditions are met. This is a nuanced exemption and
is always dependent on individual investment fact patterns.
Where investment gains are unrealised and are not
expected to qualify for SSE, the anticipated tax due based
on the current valuation of the underlying investment is
reflected in a deferred tax balance.
These factors, combined with the ability to utilise certain
brought forward losses, reduce the Group’s tax expense
in any given year. The tax expense for 2022 was £nil
(2021:£nil).
Valuation policy
Arix’s investments are valued in accordance with
International Private Equity and Venture Capital Valuation
Guidelines December 2018 (IPEV Guidelines). Listed
investments are marked–to–market at the period end.
Unlisted investments are valued with reference to the
most recent funding round, milestones, and comparable
valuations. The Group uses valuation techniques that
management consider appropriate in the circumstances
and for which sufficient data are available to measure fair
value, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs taking into
account any discounts required for non-marketability and
other risks inherent in early-stage businesses.
Further information is available in Note 2 to the financial
statements on page 84.
Post Year End
In March 2023, Arix contributed £2.8m to Harpoon’s private
placement financing. In April 2023, Arix invested £6.6m in
Evommune Inc. For further details after the reporting date
please see note 24 of the financial statements on page 103.
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26 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Investment summary
Investment
1 Jan
2022
£m
Investments
in period
£m
Realisations
in period
£m
Change in
valuation
£m
FX
movement
£m
31 Dec
2022
£m
Equity
interest
%
Not
invested
£m
Fully
funded
%
Core portfolio
Listed on NASDAQ
Aura 20.0 0.0 (1.2) (4.2) (1.5) 13.1 4.1% – 4.1%
Pyxis Oncology 14.1 0.0 (4.2) (9.9) 0.0 0.0 0.0% – 0.0%
Disc Medicine 8.1 1.7 0.0 0.0 (0.8) 9.0 4.2% – 4.2%
Harpoon 12.2 0.0 0.0 (14.6) 3.7 1.3 6.7% – 6.7%
LogicBio 4.9 0.0 (1.9) (3.1) 0.1 0.0 – 0.0%
Imara 3.9 0.0 0.0 3.9 0.0 7.8 6.1% – 6.1%
Autolus 1.9 0.0 (1.6) (0.3) 0.0 0.0 0.0% – 0.0%
Nasdaq listed total 65.1 1.7 (8.8) (28.3) 1.5 31.2
Unlisted
Artios 24.9 0.0 0.0 0.0 0.0 24.9 9.9% – 9.9%
Depixus 7.8 0.0 0.0 0.1 0.3 8.2 21.4% – 21.4%
Sorriso 5.9 0.0 0.0 0.0 0.7 6.6 26.0% 3.7 26.0%
Twelve Bio 3.8 0.0 0.0 1.0 0.2 5.0 49.0% – 49.0%
STipe 2.9 2.0 0.0 (3.7) 0.2 1.3 19.8% 19.8%
Amplyx 1.2 0.0 0.0 0.0 0.1 1.3 – – –
Ensoma 0.0 7.5 0.0 0.0 0.0 7.5
Unlisted total 46.4 9.4 0.0 (2.6) 1.6 54.8
Public opportunities
portfolio total 0.0 22.5 (7.8) (0.8) (0.4) 13.5
Other public market
investments
GenSight 6.3 0.0 (4.2) (2.6) 0.5 0.0 0.0% – 0.0%
Legacy assets 0.4 0.0 0.0 (0.3) 0.0 0.1 –
Gross Portfolio 118.2 33.6 (20.8) (34.5) 3.1 99.6
Other interests 2.4 0.0 0.0 (0.7) 1.4 3.0 –
Total investments 120.6 33.6 (20.8) (35.3) 4.5 102.6
Financial review continued
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Risk Management
The Group monitors a number of
principal risks and uncertainties that
may impact the business. These include
financial, non-financial, internal and
external concerns.
Risk management framework
The Directors are able to manage the business, and
achieve its strategic objectives, due to an effective risk
management framework which features multiple layers.
Board
Managing risk is a key responsibility of the Board, which
sets a strong tone, in line with best practice corporate
governance.
Key committees
The Audit and Risk Committee oversees the effectiveness
of the risk management processes.
The Remuneration Committee ensures incentives and
reward are balanced and appropriate for achieving the
strategy.
The Nomination Committee addresses the need for
continuing strength at the senior levels of the Company and
is responsible for succession planning.
The Strategy & Investment Committee reviews investment
and divestment proposals for management and
recommends actions to the Board for approval. It also
formulates strategy for the Group for ratification by the
Board.
Executive management
The management team is responsible for identifying,
assessing and mitigating the day-to-day operational risks.
Emerging risks are monitored by the management team
with the support of the Board. These risks are considered
in the context of the Company’s business and stakeholders.
Where potentially significant new emerging risks are
identified, these are reported to the Board for consideration
and mitigation. No new emerging risks have been identified
during the period.
Portfolio company boards and independent assurance
The boards of our portfolio companies are responsible for
ensuring they meet key commercial objectives, and in this
they are typically supported by Arix appointee directors.
Independent assurance is provided by industry experts
when required. For example, external advisers are engaged
to provide regulatory compliance support to the board of
Arix Capital Management, Arix Bioscience’s FCA-regulated
fund management subsidiary.
Internal knowledge
The Board
Sets the tone for corporate governance
Key committees
Four committees oversee the effectiveness; they ensure balance
and are responsible for succession
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
Strategy &
Investment
Committee
External assurance
Executive management
Portfolio company boards and independent assurance
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28 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Risks and mitigants
The key risks to Arix have been assessed in light of the current environment; these, along with the steps taken by Arix to
manage such risks, are detailed below. The Covid-19 pandemic was an area of significant risk for all businesses during 2020
and into 2021. However its impact on Arix and our portfolio companies has diminished to such an extent that is it no longer
seen as a key risk area going forward. Post year-end the solvency concerns at Silicon Valley Bank (SVB) became a potential
risk to those portfolio companies with deposits at the bank. Although Arix had no direct relationship with SVB, it did
utilize SVB Leerink, a subsidiary of SVB, as a broker for US listed securities. Whilst SVB Leerink has continued to operate
unaffected by actions at SVB, and the public securities were not at risk, instructions were given to transfer all holdings
from SVB Leerink before FDIC intervened with SVB. Given the actions taken by the US Government we do not foresee a
liquidity risk from SVB to any of our portfolio companies. There have been no other changes to Arix’s risk profile during the
year, although Arix continues to consider and reflect on emerging risks, currently with particular regard to cyber security
and climate change and their potential impact on the business and its stakeholders.
Area Risk Impact Mitigation
1
Clinical trial
risks
Arix’s portfolio typically
comprises companies that are
engaged in clinical trials.
There is a risk that the trials
may produce negative or
inconclusive results.
Negative clinical trial read outs
may reduce the value of the
portfolio company, potentially
to nil. This would therefore
result in a decrease in Arix’s
profitability, and reduce Arix’s
ability to generate positive cash
flows from future realisations.
Inconclusive read outs may both
reduce the value of the portfolio
company, impacting Arix’s
profitability, and require further
capital to fund additional trials
to seek further clarity in the
results, adversely impacting
Arix’s cash flow.
Portfolio companies are usually
not revenue-generating and are
typically only funded through
to an anticipated subsequent
clinical milestone. Negative
or inconclusive clinical trial
readouts might impact the
portfolio company’s ability to
attract further capital and
therefore may be unable to
continue in operation.
Arix has an experienced team
responsible for identifying and
developing portfolio companies,
resulting in a high standard
of due diligence before the
commitment of any capital.
Post‐investment, Arix typically
has representatives on the
company’s board of directors,
ensuring it is fully aware of
business developments, and
allowing for mitigation of
possible issues as they arise.
Arix’s commitments to
investments are typically
tranched, such that capital
is not overly committed to a
company at a single stage, with
further funds only invested once
pre-agreed milestones have
been reached.
Arix funds a range of portfolio
companies and continues to
develop its portfolio across a
range of therapeutic areas. Its
diverse portfolio means that
Arix’s financial performance
is not overly reliant on any one
business.
Risk Management continued
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Area Risk Impact Mitigation
2
Unlisted
investments
Arix’s portfolio comprises
certain investments which
are not listed on a recognised
stock exchange, making them
both harder to value and more
difficult to liquidate.
There is a risk that ultimate cash
proceeds from an investment
may be significantly below an
investment’s current fair value.
Arix may be unable to
realise returns on its unlisted
investments at prevailing fair
values. This may result in a
reduction in the carrying value
of investments, reducing Arix’s
profitability.
If investments cannot ultimately
be realised, this will reduce Arix’s
ability to generate positive
cash flows and reduce Arix’s
ability to continue to fund new
investment opportunities.
Arix has an experienced team
responsible for identifying and
developing portfolio companies,
resulting in a high standard
of due diligence before the
commitment of any capital.
Post‐investment, Arix typically
has representatives on the
company’s board of directors,
ensuring it is fully aware of
business developments, and
allowing for mitigation of
possible issues as they arise.
This should therefore improve
the likelihood of the investment
being a desirable acquisition
target, and therefore Arix’s
investment being monetised.
Arix funds a range of portfolio
companies and continues to
develop its portfolio across a
range of therapeutic areas. Its
diverse portfolio means that
Arix’s financial performance
is not overly reliant on any one
business.
3
Taxation
Arix aims to generate significant
gains on its investments, which
can result in potentially large
corporation tax charges.
Where possible, Arix aims to
take advantage of available
exemptions to reduce its tax
liabilities.
There is a risk that tax
authorities challenge the use of
these exemptions.
Where Arix believes it has met
the appropriate qualifying
criteria, Arix claims the UK’s
Substantial Shareholding
Exemption which reduces the
tax on such gains and losses to
nil.
If the use of this exemption
were rejected by HMRC, this
would increase Arix’s tax
liabilities, reducing Arix’s profit
after tax. It would also reduce
Arix’s cash reserves, resulting
in fewer funds being available
to fund Arix’s operations
and future investment
opportunities.
Arix’s finance team comprises
chartered accountants who
are experienced with the tax
treatments and exemptions.
Arix employs the use of a ‘Big
Four’ professional services firm
to assist with all tax disclosures,
returns and regulatory
correspondence.
For areas of significant
judgement in relation to tax,
Arix seeks further advice from
eminent professionals in the
field, such as a Queen’s Counsel
Barrister, to support the tax
treatment adopted.
Risk Management continued
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Area Risk Impact Mitigation
4
Personnel
Arix’s success is predicated on
the quality of its investment
decisions, which in turn is a
product of the calibre of its
investment team.
There is a risk of Arix being
unable to attract or retain staff
of sufficient calibre.
The financial performance
of Arix depends on its ability
to identify and develop
outstanding portfolio
companies and, as such, is
reliant on its key personnel.
Loss of key individuals could
reduce the quality of Arix’s
investment decision-making
and therefore negatively affect
Arix’s financial performance and
future prospects.
Arix’s Board and investment
team have strong scientific and
commercial backgrounds.
Arix is implementing competitive
long-term incentives for its
investment team. Corporate
staff and executive directors are
incentivised with a share option
scheme which aligns with Arix’s
performance and shareholder
experience.
Arix’s Nomination Committee
is responsible for appropriate
succession planning.
5
Macroeconomic
and geopolitical
conditions
Adverse macroeconomic and
geopolitical market conditions
may impact Arix’s operational
model.
In particular, the current conflict
in Ukraine, including sanctions
imposed on Russia.
Adverse geopolitical and/or
macroeconomic conditions may
reduce opportunities for Arix
to realise capital from portfolio
companies, affecting cash flow
and financial performance if
portfolio valuations are reduced.
The same conditions may
also negatively impact the
availability of capital for any
external fundraising by Arix or
its portfolio companies.
Arix’s strategy is to deploy
capital into innovative
businesses which, if successful,
will have unique, high impact
outcomes on patients’ lives. Arix
believes that the inherent value
of such businesses to patients
and therefore acquirers, is less
susceptible to macroeconomic
cycles and disruptive geopolitical
events.
Arix has generally well-funded
portfolio companies across the
USA and Europe. As such, it
is not overly reliant on capital
markets in the short term.
Arix monitors its availability
of capital closely, ensuring
sufficient funds are available for
the investment and operational
needs of the business.
Risk Management continued
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Area Risk Impact Mitigation
6
Legislation
& regulation
Changes to government policy
or regulation in the research,
healthcare or life sciences
industries could impact Arix or
its portfolio companies.
A change in government
regulation (for example CFIUS
in the United States) may
adversely affect the profitability
of the healthcare and life
sciences industry, resulting
in a reduction in the number
of investment opportunities,
availability of external funding
or potential exit opportunities
for portfolio companies.
Arix’s portfolio is diversified by
geography, with exposure to
the USA and Europe, protecting
the company from the adverse
actions of any one government.
Arix’s corporate team actively
monitors changes to laws
and regulation, and where
necessary enlists the advice of
relevant experts to consider any
company or portfolio impacts.
Viability statement
The Board has assessed the prospects of Arix over a period
greater than 12 months. We have considered a period of
three years from the balance sheet date, as the Board
expects the majority of Arix’s current commitments and
new proceeds raised to be committed over the next three
years, and therefore reflects the period over which the
Group’s cash flows are assessed internally.
A robust assessment of the principal and emerging risks
and their mitigants has been carried out. The Board
assessed Arix’s business model, particularly its approach
to capital which is legally committed to, and provisionally
reserved for further investment into existing portfolio
companies. Key judgements reflected how future cash
requirements may change from restrictive regulations and
how the availability of capital may be impacted by ability to
raise further capital on the public markets.
Having initially started with a base case scenario
considering Arix’s finances over the assessment period, the
estimated impacts on the Group’s cash flow, as described
above, are modelled, creating a range of adverse scenarios.
An extreme downside case is then considered, reflecting the
estimated cash flow impact of all considered risks occurring
concurrently. Finally, the analysis considers the mitigating
actions the Group could take to reduce the financial impact
of the noted risks.
Based on its review, and the consideration of any changes
that had occurred post year-end, including the risk of
additional market volatility due to the emerging conflict in
Ukraine (note 24), the Board has a reasonable expectation
that Arix will be able to continue in operation and meet its
liabilities as they fall due over a three-year period from the
date of this report and confirm that preparing the financial
statements on a going concern basis is appropriate.
Risk Management continued
The views and interests of our
Stakeholders remain of paramount
importance to the Board and continue
to inform Board discussions and
decision-making.
Stakeholder Engagement
The Board maintains an open and productive dialogue
with all our Stakeholders throughout the year as discussed
below and is satisfied, through the careful tracking of
the outcomes of these discussions and decisions, that
the approach it takes to stakeholder engagement is
proportionate to our business and remains effective.
Statement by the Board in accordance
with s172 Companies Act 2006
We believe that considering our stakeholders in key business
decisions is not only the right thing to do, but is fundamental
to our ability to drive value creation over the longer term.
During this financial year, in the midst of the War in Ukraine,
balancing the needs and expectations of our stakeholders
has never been a more important or challenging task.
The Directors of the Board are cognisant of their duties
under s172 of the Companies Act and consider that they
have acted in a way they each consider, in good faith, would
be most likely to promote the success of the Company for
the benefit of its members as a whole. In doing so they have
had regard to those stakeholders identified under s172, as
well as the additional stakeholders set out here.
Shareholders
Securing our shareholders’ trust through continuous
engagement ensures their ongoing investment and support
and the Board is focused upon delivering long-term value
for their benefit. This purpose is evident throughout the
Board’s decision-making and is a constant consideration
when addressing the interests of our other stakeholders.
The Company engages with its shareholders on a regular
basis with significant engagement in 2022. Whilst physical
meetings were restricted for the first half of the year,
virtual meetings have continued to be held and with a
return to physical meetings there has been the opportunity
to engage with shareholders throughout the year. The
results of this Investor Engagement are reported to the
Board to help inform our communications and strategy.
Colleagues
We cannot operate and achieve our strategic goals without
an engaged colleague base that feels appreciated and is
motivated to deliver for our investors and the business’
success. Key priorities for the Board in respect to employee
engagement include promoting an inclusive and diverse
place to work with a respectful corporate culture where
colleagues are encouraged to share their views and have
their voices heard in decision-making and we strive to make
our colleagues feel valued and appropriately rewarded.
The Board are proud of the small team of employees
which work collaboratively and continuously to deliver for
our investors. As a result of the culture at Arix, and the
small number of employees, each colleague has open and
continuous access to engage with our Board of Directors
and they meet with the Board throughout the year both
virtually and face to face to discuss any matters arising.
2022 saw further evolution of the management team
which enabled internal progression for some employees,
whilst strengthening the Company’s ability to deliver
on its strategy. The Board, in collaboration with the
Remuneration Committee, have had particular regard to
employees as they have considered the Company’s long-
term incentive arrangements as part of its strategy to
attract, retain and motivate colleagues in order to deliver
value for shareholders. These actions were consistent with
the Board’s commitment to investing in and responsibility
rewarding employees as they deliver on the Company’s
strategy.
Service Providers
The Board regularly evaluates the performance of its
key panel of third-party professional service providers
which includes the Company’s external accounting team,
remuneration advisors and company secretary.
Portfolio companies
Our portfolio companies are at the heart of our business
as it is their operational and clinical progress which will
ultimately deliver value for our shareholders. However,
whilst the Board is naturally focused on their development
and what it will mean for the growth in our NAV, we
are also conscious of the benefit we can bring to those
companies as an engaged and supportive shareholder.
Arix is closely involved with its portfolio companies and
the members of the investment team provide a direct
connection from the Board to the portfolio companies,
ensuring that the Board is regularly updated on their
progress and can support their development.
Decisions
Investment: The Board has supported the continued
deployment of capital into the portfolio, including
supporting Disc Medicine’s reverse merger with Gemini
Therapeutics and new investment into Ensoma alongside
its acquisition of existing portfolio company Twelve Bio.
This continued investment not only supports our portfolio
companies as they work to deliver new treatments for
patients, but also provides the opportunity for significant
financial returns to shareholders.
Our stakeholders
Engagement and Decision-Making
32 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Cost control: 2022 saw a continued focus on managing the
run-rate net operating costs of the business. In ensuring
that costs are kept low, the Board had particular regard to
Arix’s shareholders but also the interests of its employees
and portfolio companies in building a sustainable business
which can deliver superior returns over the longer term.
Imara: The Board was engaged and supportive of
Imara’s merger with Enliven Therapeutics. Following
the disappointing clinical failure at Imara in early 2022,
the successful reverse merger with Enliven will not only
provide liquidity for Arix as in investor in due course, but
also allows Imara’s capital to support Enliven’s important
clinical programs. This transaction is consistent with
Arix’s goal of maximizing return on investment, even
after a disappointing clinical outcome, and delivering new
treatments for patients.
Environment, Employees, Human Rights and Social
Matters
Due to Arix's status as a life sciences investment company
with minimal full time employees the direct impact on
environmental matters, social, community and human
rights issues is minimal. No further disclosures are to be
made in respect of these matters beyond those set out in
the Streamlined Energy & Carbon Reporting section which
follows on page 34.
Our stakeholders continued
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34 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
The section below includes our mandatory Streamlined
Energy and Carbon Reporting requirements. The reporting
period is the same as the Group’s financial year, 1 January
2022 to 31 December 2022.
Emissions
We have reported on all of the emission sources required
under the Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon Report)
Regulations 2018. These sources fall within the Group’s
consolidated financial statement.
An operational control approach has been used in order
to define our organisational boundary. This is the basis
for determining the Scope 1 and 2 emissions for which the
Group is responsible.
The emissions sources that constitute our boundary for the
year to 31 December 2022 are:
• Scope 1: natural gas combustion within boilers and
refrigerant gas losses; and
• Scope 2: purchased electricity for our own use.
All carbon dioxide emissions and energy consumption
figures relate to emissions in the United Kingdom (UK),
accounting for 73% of total emissions, and the United
States of America (USA), accounting for 27% of total
emissions.
Methodology
For the Group’s reporting, the Group has employed the
services of a specialist adviser, Verco Limited, to quantify
and verify the Greenhouse Gas (GHG) emissions associated
with the Group’s operations.
The following methodology was applied by Verco in the
preparation and presentation of this data:
• The Greenhouse Gas Protocol published by the World
Business Council for Sustainable Development and the
World Resources Institute (the “WBCSD/WRI GHG
Protocol”);
• application of appropriate emission factors to the Group’s
activities to calculate GHG emissions;
• application of 2 reporting methods, location-based and
market-based emission factors, for electricity supplies;
• inclusion of all the applicable Kyoto gases, expressed in
carbon dioxide equivalents, or CO
2
e;
• presentation of gross emissions as the Group does not
purchase carbon credits (or equivalents);
• presentation of global annual energy use;
• where data was missing, values were estimated using an
extrapolation of available data or available benchmarks;
and
• calculation of electricity and gas consumption using
CIBSE energy benchmarks where data was not available.
Absolute Emissions
The total Scope 1 and 2 GHG emissions from the Group’s
operations in the year ending 31 December 2022 were:
• 8.1 tonnes of CO
2
equivalent (tCO
2
e) using a ‘location-
based’ emission factor methodology for Scope 2
emissions; and
• 8.9 tonnes of CO
2
equivalent (tCO
2
e) using a ‘market-
based’ emission factor methodology for Scope 2
emissions.
The Group's GHG emissions have been separated by those
generated inside of the UK and those generated outside of
the UK - the USA in this case. The breakdown is as follows:
• 61% of emissions were generated in the UK and 39% were
generated in the USA using the 'location-based' emissions
factor methodology for Scope 2 emissions;
• 71% of emissions were generated in the UK and 29% were
generated in the USA using the 'market-based' emissions
factor methodology for Scope 2 emissions.
Total Energy Use
The total energy use for the Group for FY2022 was 36,334
kWh.
Electricity/Fuel
Total
Energy Use
(kWh)
Electricity
(kWh)
Gas
(kWh)
2022 16,142 20,192 36,334
2021 12,524 26,565 39,089
2020 29,006 27,331 56,337
Intensity Ratio
As well as reporting the absolute emissions, the Group’s
GHG emissions are reported on the metrics of tonnes of
CO2 equivalent per employee and tonnes of CO2 equivalent
per square foot of the occupied areas. These are the most
appropriate metrics given that the majority of emissions
result from the operation of the Group’s offices and the
day-to-day activities of the employees.
Sustainability
Streamlined Energy & Carbon Reporting
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Sustainability continued
The intensity metrics for FY2022 were as follows:
• 1.01 tonnes (2021: 1.29 tonnes) of CO2e per employee
(location-based method) and 1.11 tonnes (2021: 0.55
tonnes) of CO2e per employee (market-based method);
and
• 0.004 tonnes (2021: 0.004 tonnes) of CO2e per square
foot of occupied space (location-based method) and
0.004 tonnes (2021: 0.002 tonnes) of CO2e per square
foot of occupied space (market-based method).
Change in Emissions
There has been an increase in emissions for both location-
based of 8.0% and an increase in emissions market-based
methods of 14%. The market based emissions in 2022 have
increased due to increased office occupancy and resultant
energy and facilities usage per head in comparison to that
of 2021 when post Covid-19 events and working from home
arrangements were more frequent.
GHG emissions 2022 2021 2020
Tonnes
CO
2
e
tCO
2
e /
emp.
4
tCO
2
e /
sq. ft.
5
Tonnes
CO
2
e
tCO
2
e /
emp.
4
tCO
2
e /
sq. ft.
5
Tonnes
CO
2
e
tCO
2
e /
emp.
4
tCO
2
e /
sq. ft.
5
Scope 1
1
3.68 0.46 0.002 4.86 – – 5.02 0.55 0.002
Scope 2
2
4.41 0.55 0.002 2.67 – – 6.77 0.74 0.002
Scope 2
3
5.21 0.65 0.003 2.94 – – 0.09 0.00 0.00
Total GHG emissions
(Location-based Scope 2) 8.10 1.01 0.004 7.53 – – 11.80 1.29 0.004
Total GHG emissions
(Market-based Scope 2) 8.89 1.11 0.004 7.80 – – 5.11 0.55 0.002
1
Scope 1 being emissions from the Group’s combustion of fuel and operation of facilities.
2
Scope 2 being emissions from electricity (from location-based calculations), heat, steam and cooling purchased for the Group’s own use.
3
Scope 2 being emissions from electricity (from market-based calculations), heat, steam and cooling purchased for the Group’s own use.
4
Employee numbers: 8 (FY2022); varies throughout FY2021: 9 9 (FY2020). Intensity ratio not calculated for 2021 due to an office move and absolute figures not being
obtained.
5
Occupied office space: 2,077 ft
2
(FY2022; varies throughout FY2021 due to office move; 2,844 ft
2
(FY2020). Intensity ratio not calculated for FY2021 due to an office
move and absolute figures not being obtained.
6
Location based emissions are UK only.
Energy Efficiency Actions
The Group offers fully remote working twice a week to all employees, with the aim of reducing emissions related to
commuting.
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Key Figures
Scope 1
Scope 2 (location-based)
Scope 3 (market-based)
Arix Bioscience plc – Breakdown of emissions by scope
2022
2021
0% 20%
40% 60% 80% 100%
3.70 4.40 5.21
4.90 2.70 2.90
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36 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Chairman’s Governance Overview
Dear Shareholder,
I am pleased to present this year’s Report on Corporate
Governance. This report forms part of the Directors’
Report which follows. Since its listing on the London Stock
Exchange in February of 2017, the Company has voluntarily
applied the UK Corporate Governance Code (the Code) as
an integral part of its approach to governance. This report
includes a description of how the Company has applied
the Code in the context of the Company’s governance
structures.
Turbulent Times
The Board has delivered a heightened degree of oversight
and scrutiny throughout 2022 to ensure the long-term
sustainable success of the Company in light of the impacts
of unstable markets and the War in Ukraine on our business
and on the markets more generally.
New Leadership
There were a number of changes to the Arix Board this
year. Shareholders will have noted our announcement last
August confirming the appointments of Dr Debra Barker,
Dr Benny Soffer, and Andrew Smith as independent, Non-
Executive Directors. At the same time, Sir Michael Bunbury
resigned from the Board as Senior Independent Director
(“SID”). Debra Barker was subsequently appointed as SID
and Chair of the Remuneration Committee and we are very
pleased that Andrew Smith has since accepted the role
of Chair of the Audit and Risk Committee. Benny Soffer
resigned from the Board on 31 January 2023, post year-
end.
On behalf of the Board, I would like to thank Sir Michael
Bunbury personally for his contributions to the Board
and Committees of the Company and his significant
contribution to improving corporate governance at Arix
throughout 2022.
Peregrine Moncreiffe
Chairman
24 April 2023
Corporate Governance Report
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Corporate Governance Report continued
UK Corporate Governance Code
Compliance Statement
As a company admitted to the standard segment of the Official List, the Company is not required to adopt the UK
Corporate Governance Code but it has voluntarily chosen to observe the requirements of the Code, a copy of which is
available at www.frc.org.uk. For the year ended 31 December 2022, the Board considers it has made valiant efforts to
comply in full with all applicable principles and provisions of the Code. Where the Company has deviated from the Code, an
explanation is set out below: During the year the Company has applied all of the main principles of the Code and provides
below explanations of its non-compliance with the Code provisions:
Provision 5 – The Company operates a lean business model employing only 9 employees across Europe and the USA (at
31 December 2022); this scale means that the Board has not felt it necessary to designate a Non-Executive Director to
specially engage with the workforce, as the Board has regular and Direct contact with its employees as discussed on
page 32 of this report.
Provision 11 – During the year, the Non-Executive Director Appointments of Debra Barker, Benny Soffer and Andrew
meant that the Company were compliant with this provision as over 50% of the NEDs were independent upon
appointment (excluding the Chair), however Benny Soffer’s departure on 31 January this year meant that only one
third of the Board is currently comprised of independent non-executive directors. The Board is looking to add a further
independent non-executive director in 2023 to address this balance.
Key areas of Board Focus and Consideration during the year under review are set out in the table below
Focus Operation
Leadership, strategy and
management
• Providing leadership and setting values and standards.
• Approving the Company’s strategic aims and objectives.
• Overseeing operations.
Structure and capital • Changes to the Group’s capital or corporate structure.
• Changes to the Group’s management and control structure.
Financial reporting • Approval of financial statements.
• Review of the dividend policy.
• Approval of material changes in accounting policies.
• Approval of major capital expenditure.
Risk management and
internal controls
• Ensuring maintenance of a sound system of internal control and risk management.
• Determining the principal risks of the Company and how they are managed and
mitigated.
• Reviewing the effectiveness of the risk and controls processes.
Board membership • Changes to the structure, size and composition of the Board.
• Ensuring adequate succession planning.
• Appointment or removal of the Chairman, CEO, SID and Company Secretary.
Corporate governance • Review of Group’s overall governance framework.
• Determining the independence of Directors.
• Considering the balance of interests between shareholders and other stakeholders.
• Authorising any conflicts of interest.
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38 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Focus Operation
Remuneration • Determining the policy for remuneration of the Chairman, the Chief Executive Officer
(CEO), the Company Secretary and senior investment team members.
• Ensuring that the pension contribution rates for the CEO, or payments in lieu, are aligned
with those available to the workforce.
• Ensuring that workforce remuneration and related policies are taken into account when
setting Directors’ remuneration.
• Ensuring that employee engagement has taken place to explain how executive
remuneration aligns with wider company pay policy.
• Determining the remuneration of the Non-Executive Directors.
• Introducing new share incentive plans or major changes to existing plans.
Other • Approval and monitoring of the share dealing code.
• Keeping the Company’s ESG Strategy and mandatory reporting obligations under
review.
• Approving policies and political and charitable donations.
• Approval of the overall levels of insurance for the Group.
Board leadership and company purpose
Our governance framework facilitates responsive and
effective decision-making, ensuring that the Board and
its Committees, senior management and the Company’s
professional service providers are able to collaborate
proactively, consider issues and respond accordingly.
An effective Board
The role of the Board is to define the company’s purpose
and provide entrepreneurial leadership to the Group to
set a strategy underpinned by the values and behaviours
that shape its culture. An effective board monitor’s
performance and ensures that the necessary financial and
human resources are in place to enable the Group to meet
its objectives. It will be able to explain the main trends
and factors affecting the long-term success and future
viability of the company and how these and the company’s
principal risks and uncertainties have been addressed. In
addition, the Board ensures the appropriate financial and
business systems and controls are in place to safeguard
shareholders’ interests and maintain effective corporate
governance.
The Board operates in accordance with the Company’s
Articles of Association and its own written schedule of
matters reserved for Board decision-making. The Board
has established a number of committees, each with its
own defined terms of reference, which are reviewed at
least annually and are publicly available on the Company’s
website at: www.arixbioscience.com/investrorelations
Assessing and monitoring culture
The Board is keen to ensure that the culture of the
Company is aligned to Arix’s Purpose, Goal and Values (as
set out on the inside front cover to this report). Individual
Board members have regular, direct contact with the
business and are confident that the culture of the Company
and its employees is consistent with what it expects in
order to maintain a high standard of business conduct and
deliver the Company’s strategy. This is consistent with the
Board’s duties under s172 of the Companies Act as further
described on page 32.
Stakeholder and employee engagement
The Board has actively engaged with stakeholders,
including employees, throughout the period and has taken
their interests into account when making decisions. Due to
the low employee numbers it is possible for the Board to
have regular and direct interaction with a large proportion
of the Company’s employees, and management team,
many of whom participate at meetings of the Board and its
Committees.
A full description of the Company’s engagement with its
stakeholders is set out on page 32 with specific description
of engagement with employees on remuneration on page
54 of the Remuneration Report. As described on page 51 of
the Audit and Risk Committee Report, the Company has
kept its Whistleblowing Policy and arrangements under
review during 2022.
Corporate Governance Report continued
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39ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Corporate Governance Report continued
External relationships
Due to the nature of our business, we have very few
suppliers and direct customers, however the Board
recognises that to deliver our strategy requires strong,
mutual and beneficial relationships with our professional
service providers. The Board carefully considers the need to
foster its business relationships with its key stakeholders
of which an explanation is set out on page 32 outlining how
this is achieved.
Conflicts of interest
Each Director has a duty under the Companies Act 2006
to avoid a situation where they have, or can have, a direct
or indirect interest that conflicts, or possibly may conflict
with the company’s interests. The Company’s Articles of
Association set out the policy for dealing with Directors’
conflicts of interest, in line with the Companies Act 2006.
The Articles permit the Board to authorise conflicts and
potential conflicts, as long as the potentially conflicted
Director is not counted in the quorum and does not vote
on the authorising resolution. All Directors declare any
potential conflicts of interest before their appointment,
such that the Board can consider how to address any
pre-existing potential conflicts before an appointment is
confirmed. A record of Directors’ interests is kept by the
company secretary and Directors are reminded at the
beginning of each Board meeting to notify the Board of any
further conflicts of interest, in accordance with Sections
175, 177 and 182 of the Companies Act 2006.
Board attendance
Board Audit
& Risk
Remuneration Nomination Strategy &
Investment
Peregrine Moncreiffe 8/8 3/3 2/2 3/3
Debra Baker* 3/3 2/2 1/1
Isaac Kohlberg 7/8 1/2 3/3
Maureen O’Connell** 7/8 3/3 1/1 1/1 3/3
Robert Lyne 8/8 3/3
Andrew Smith* 3/3 1/1 1/1
Benny Soffer* 3/3 1/1 2/2
Sir Michael Bunbury* 5/5 5/5 1/1
* Sir Michael Bunbury resigned from the Board of Directors on 9 August 2022. Debra Barker, Andrew Smith and Benny Soffer were appointed to the Company’s Board and
its Committees on 10 August 2022.
** Maureen O’Connell stepped down as Chair of the Remuneration Committee and resigned from the Company’s Board Committees during the year.
Attendance is expressed as the number of scheduled meetings attended out of the number of such meetings possible or applicable for the Director to attend.
Board independence
Non-Independent
Current directors
Robert Lyne (being an executive director), appointed
29 April 2021
Isaac Kohlberg (having been proposed by and a
non-executive director of the Company’s largest
shareholder, Acacia), appointed 29 April 2021
Maureen O’Connell (having been proposed by and
the non-executive Chair of the Company’s largest
shareholder, Acacia), appointed 29 April 2021
Independent
Current directors
Peregrine Moncreiffe, appointed 29 April 2021
Dr. Debra Barker, appointed 10 August 2022
Andrew Smith, appointed 10 August 2022
Dr. Benny Soffer, appointed 10 August 2022 and resigned
on 31 January 2023, after the reporting date.
Sir Michael Bunbury, appointed 6 October 2021 and
resigned on 9 August 2022.
Read more on the Board of Directors on page 42.
Board process
The Board meets formally at least once per quarter with ad
hoc meetings called as and when circumstances require at
short notice. The table above shows the attendance of each
Director at formal meetings of the Board and the Code
governed committees of which they are a member.
All Directors are expected to attend all meetings of the
Board, and any committees of which they have been
appointed and to devote sufficient time to the Company’s
affairs to fulfil their duties as Directors. Where Directors
are unable to attend a meeting, they will be encouraged
to submit to the Chairman any comments on papers to be
considered at the meeting in advance, to ensure their views
are recorded and taken into account.
The Non-Executive Directors meet at least once per year
without the Chairman present and on such additional times
as are required.
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40 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Training and development of Board Directors
The Company Secretary regularly provides the Board
with updates on Corporate Governance and regulatory
matters at Board meetings. All Directors are provided with
an introduction to the Company and relevant background
materials. All Directors have access to the advice of the
Company Secretary who is responsible for advising the
Board on all governance matters.
Information and support
An agenda and accompanying detailed papers are
circulated to the Board in advance of each Board meeting.
These include reports from the Chairman and other
members of senior management, and all Directors have
direct access to senior management should they require
additional information on any of the items to be discussed.
In December 2022, the Board transitioned to utilising a
reputable Board portal to securely disseminate and review
all confidential Board and Committee meeting materials.
The information supplied to the Board and its committees
will be kept under review to ensure it is fit and proper for
purpose, and that it enables sound decision-making.
The Company has adopted a formal procedure through
which Directors may obtain independent professional
advice at the Company’s expense. The Directors also
have unrestricted access to the services of the Company
Secretary.
Division of responsibilities
Key Board roles and responsibilities
The Board is ultimately responsible to shareholders for
the direction, management, performance and long-term
sustainable success of the Company. It sets the Group’s
strategy and objectives and oversees and monitors internal
controls, risk management, principal risks, governance and
viability of the Company. In doing so, the Directors comply
with their duties under section 172 of the Companies Act
2006.
The Board has established certain principal committees to
assist it in fulfilling its oversight responsibilities, providing
dedicated focus on particular areas as described in the
reports of the Nomination, Remuneration, Strategy
& Investment and Audit & Risk Committee reports
incorporated in this Annual Report. The Chair of each
committee reports to the Board on the committee’s
activities after each meeting.
Role of the Chairman
The Chairman is responsible for the leadership and
effectiveness of the Board:
• In particular, the formulation of strategy and its
alignment with culture, governance (having regard to best
practice); Board changes and succession planning.
• Ensuring constructive relations between Non-Executive
Directors and the Chief Executive Officer and senior
management.
• Ensuring that new Directors receive a full, formal and
tailored induction on joining the Board.
• Monitoring and actively participating in stakeholder
engagement.
• Ensuring that the Company Secretary is effective and
supported.
• Chairing the Company’s AGM and all other formal
shareholder meetings.
Role of the Senior Independent Director
Dr. Debra Barker was appointed as Senior Independent
Director (SID) on 10 August 2022 following the resignation
of Sir Michael Bunbury on 9 August 2022. The role as SID is
to act as a sounding board for the Chairman and serve as
an intermediary for the other Directors when necessary. In
order to fulfil this role:
• The SID will meet other Non-Executive Directors without
the Chairman present at least once a year, to appraise the
Chairman’s performance, taking into account the views of
any Executive Directors, plus on such other occasions as
are deemed appropriate.
• The SID is also available to shareholders should they wish
to discuss concerns they have failed to resolve through
the normal channels of the Chairman or any Executive
Director or for which such contact is inappropriate.
Role of the Chief Executive Officer
The Chief Executive role is primarily responsible for the
running of the Group and for executing strategy as agreed
by the Board. This involves:
• Driving the execution of the Company’s strategy.
• Chairing the Strategy and Investment Committee.
• Ensuring implementation of the Board’s decisions.
• Ensuring the timely communication of information to
the Board in sufficient detail to allow it to monitor the
performance of the Group’s business as a whole.
• Communicating to the Board their own views and those
of the management team, on business issues facing the
Group such that the Board may have a full and balanced
view of the issues and factors it should consider when
making decisions.
Corporate Governance Report continued
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41ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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• Managing their direct reports and ensuring that the
overall team is motivated and develops in order to deliver
on the Group’s strategy.
• Ensuring the effective implementation of the Company’s
wider stakeholder engagement programmes.
Board Composition
The Board currently consists of six Directors (including the
Chief Executive Officer), three of whom are considered
to be independent (including the Chair). We clearly define
the roles of the Chair and the Chief Executive and fully
support the separation of the two roles. Furthermore, the
Board believes it operates effectively with the appropriate
balance of independent Non-Executive Directors and
Executive Directors (see page 44).
Commitment
The Board regularly considers the time commitments of
our Directors. The Board expects Non-Executive Directors
to commit sufficient time to allow them to meet their
obligations to the Company. The Non-Executive Directors
are required to confirm, on acceptance of the role, that
they have sufficient time to meet the expectations of their
role. Non-Executive Directors will need to attend scheduled
and emergency Board meetings and committees as well as
the AGM, as well as allowing appropriate preparation time
ahead of each meeting.
The quality of information and resources available to the
Board has enabled us to operate effectively and efficiently
throughout the year.
Peregrine Moncreiffe
Chairman
24 April 2023
Corporate Governance Report continued
Board of Directors
Peregrine Moncreiffe
Peregrine Moncreiffe has extensive experience in investment
management and banking. In his previous career, Peregrine held various
corporate finance and trading positions in New York, London and East
Asia within the Credit Suisse First Boston (CSFB) group over a ten-year
period, ending up as an Executive Director of CSFB in London in 1982.
Peregrine also held a number of trading management roles at Lehman
Brothers as a Managing Director in New York and London until 1986,
when he joined E F Hutton as Managing Director of International
Capital Markets before it was acquired by Shearson Lehman in 1988.
From 1990 to 2000 he was Chief Executive Officer of Buchanan
Partners Ltd, a proprietary investment company which he co-founded.
In 1998 he became Chairman of UA Group, the agricultural services and
property investment business sold to Elphinstone in 2005. He remains
a director of North Atlantic Investment Trust plc after stepping down
from the Chair after more than 9 years in the role. Peregrine remains
a director of Metage Funds Limited and of a Jersey holding company
through which Acacia, alongside other shareholders, hold an interest in
Viamet Pharmaceuticals, Inc.
Peregrine received an undergraduate degree from the University of
Oxford.
Peregrine is a member of the Strategy & Investment, Audit,
Nomination and Remuneration Committees for Arix.
Debra Barker, MD
Dr Debra Barker is a seasoned International Life Sciences executive
with more than 25 years’ senior experience in major pharmaceutical
companies Roche, SmithKline Beecham and most extensively
Novartis where she held several senior scientific, operational and
commercial roles over 17 years, including Development Head for
Infectious Diseases, Immunology and Transplantation, Global
Programme Head in Oncology and Head of Clinical and Medical
Services. Biotech experience was gained in Chief Medical Officer &
Head of Development roles and Debra was also the medical lead for
the Swiss-based Biotech Polyphor’s highly successful IPO on the SIX
Swiss Exchange.
Debra is currently serving as a Non-Executive Director for three public
Biotechnology companies listed in UK, EU & USA namely Destiny
Pharma PLC, BergenBio ASA and CureVac NV.
Debra has a Diploma in Pharmaceutical Medicine and received a
MSc in Immunology from the King’s College in London and a Medical
Degree from the Queens’ College, Cambridge, UK.
Debra joined the Arix Board in August 2022 as Senior Independent
Director and is Chair of the Remuneration Committee, a member
of the Audit & Risk Committee, the Nomination Committee and the
Strategy & Investment Committee.
Robert Lyne
Robert Lyne has 15 years’ experience working with high growth
technology companies having spent several years working in listed
venture capital. He joined Arix in 2017 as General Counsel and
Company Secretary before being promoted to Chief Operating
Officer in 2019. He joined the Board in April 2021 and was appointed
Interim Chief Executive Officer before being subsequently appointed
to the role on a permanent basis. He began his career as a lawyer at
international law firm Bird & Bird LLP in London. He has worked on
over 80 venture capital financings in Europe and North America as
well as multiple trade exits and IPOs, working with both company
boards and investors to successfully execute complex cross-border
transactions. As an experienced plc Company Secretary, Robert has
broad experience of public company governance.
Robert has a BA from the University of Oxford and an LLB from
Oxford Brookes University.
Isaac Kohlberg
Isaac Kohlberg has had a distinguished career protecting and
commercializing IP for leading universities and research institutions.
He currently is a Senior Associate Provost and Chief Technology
Development Officer at Harvard University, where he is responsible
for the strategic management and commercial development
of all technologies and intellectual property (IP) arising from
Harvard’s research enterprise. Isaac’s role at Harvard University
includes industry liaising and outreach, IP management, business
development, technology commercialization and the formation of
startup companies and new ventures around Harvard technology
platforms. In tandem, he is also responsible for generating,
structuring, and negotiating research alliances and collaborations
with industry and generating industry-sponsored research funding
for Harvard faculty.
Isaac currently serves as a non-executive director of Acacia, Arix’s
largest shareholder, and received his M.B.A. from INSEAD and LL.B.
from Tel Aviv University.
Isaac joined the Arix Board in April 2021 and is a member of the
Strategy & Investment Committee.
Maureen O’Connell
Maureen O’Connell is a global business executive, Chief Financial
Officer and corporate director recognized for significant value
creation through strategic initiatives in a variety of industries
including media, education, digital, retail, technology, professional
services, biotech, pharma, homebuilding, real estate and insurance.
From 2007 to 2017, Maureen served as the Chief Financial Officer of
Scholastic Corporation, the world’s largest publisher and distributor
of children’s books. In her role as Chief Financial Officer, where she had
significant experience licensing rights, partnering with trademark and
copyright owners, and overseeing the protection and assertion of rights
on a world basis. Earlier in her career, Maureen served as President
and Chief Operating Officer of the Gartner Group the world’s leading
research and advisory company which has developed more than
300,000 business case studies of intellectual property since 1979.
Maureen has received numerous and diverse awards including
CFO Studio’s CFO World Class Award in 2017, Treasury and Risk
magazine’s 30 Outstanding Women in Business in 2012 and Irish
Voice’s Top 75 Influential Women in 2009.
Maureen also served as an independent director, audit committee
chair and transaction committee chair at Sucampo Pharmaceuticals,
a biopharmaceutical company focused on the development and
commercialization of highly specialized medicines, from 2013 to 2018
when it was acquired by Mallinckrodt in a $1.2 billion transaction. At
Sucampo, Maureen played a key role in evaluating the acquisition
of highly specialized medicines in development resulting in the
acquisition of two companies. She was previously an independent
director at Harte-Hanks Inc. and previously served on the board of
directors of Beazer Homes USA Inc. Maureen currently serves as a
Director of Acacia, Arix’s largest shareholder.
Maureen graduated Magna Cum Laude with a B.S. in Accounting and
Economics (dual major) from New York University Stern School of
Business in 1985 and is a Certified Public Accountant.
Maureen joined the Arix Board in April 2021 and is a member of the
Strategy & Investment Committee.
42 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Board of Directors continued
Andrew Smith
Andrew Smith is an accomplished executive leader with over 30 years’
international experience within the medical device and bio-pharma
sectors. He currently serves as Chief Financial Officer for Santhera
Pharmaceuticals AG, a public company listed on SIX under SANN,
a global specialty pharmaceutical company focused on developing
medicines for rare diseases. Before joining Santhera he held the
roles of CFO and COO at Allecra Therapeutics GmbH and CFO at
Sucampo Pharmaceuticals Inc, listed on NASDAQ under SCMP, until
2017, it was subsequently acquired by Mallinckrodt in February 2018.
Together with previous senior financial and operations roles
focusing on business improvement and transformation he has
gained significant exposure to European and US markets working in
public and private organizations with a focus on start-ups, spinoffs
and growth and has been involved in a number of capital market
transactions in excess of $800 million.
Andrew is a Fellow of the Chartered Institute of Management
Accountants and a Chartered Global Management Accountant. He
studied Business and Accounting at Liverpool John Moores University
and Durham University Business School.
Andrew joined the Arix Board in August 2022 and is Chair of the Audit
Committee and a member of the Nomination Committee.
Sir Michael Bunbury
Sir Michael Bunbury stepped down from the Board of Directors and
associated Board Committees on 9 August 2022.
Benny Soffer
Benny Soffer resigned from the Board of Directors and associated
Board Committees on 31 January 2023, after the reporting date.
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44 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Peregrine Moncreiffe
Chairman of the Nomination Committee
Composition
Peregrine Moncreiffe (Chairman)
Dr. Debra Barker
Andrew Smith
Dear Shareholders,
On behalf of the Board, I am pleased to present the
Nomination Committee report for the year ended
31 December 2022.
Key areas of focus for the committee in 2022 included:
• Non-Executive Director appointments.
• Executive Team succession planning.
• Diversity & inclusion.
Key areas of focus for 2023
• Diversity & inclusion.
• Management Team diversity and succession planning.
Role and responsibilities
The role of the Nomination Committee is set out in its
terms of reference, available on the Company’s website
www.arixbioscience.com/investrorrelations.
The Nomination Committee assists the Board in
discharging its responsibilities relating to the composition
and make-up of the Board and its committees.
Specific duties of the Nomination Committee include:
• Reviewing the composition of the Board and the Board’s
committees.
• Reviewing the balance of skills required by the Board and
its committees and the business as a whole.
• Considering the need for succession planning within the
Board and the Board’s committees.
• Setting and managing the process for the search for new
Non-Executive Directors (NEDs).
Key areas of focus for the committee in 2022 included:
Effectiveness and succession planning
• The committee reviewed the results of the Board
performance evaluation process and agreed actionable
items arising to take forward to 2023.
• The committee reviewed the time commitments of all
Non-Executive Directors to ensure all members of the
Board are devoting sufficient time to fulfil their duties.
• The committee met to discuss and assist with succession
planning, advised by the CEO about any strategic and
commercial changes affecting the Company and satisfied
itself that appropriate processes and plans are in place
for succession planning.
Appointments
• The committee actively participated in the recruitment
process, and actively contributed to the onboarding and
induction of each of the newly appointed Non-Executive
Directors assisted by the Company Secretary.
• The committee made recommendations to the Board
regarding the re-election of Directors by shareholders at
the company’s Annual General Meeting.
Board and Committee composition
• The committee reviewed the structure, size and
composition of the Board and its committees and made
recommendations for changes to the membership of the
committees.
• The committee evaluated the balance of skills, knowledge,
experience and diversity of the Board.
• The committee reviewed suitable candidates for the role
of the Senior Independent Director and recommended
the appointment of Dr. Debra Barker as SID with her
appointment effective as at 10 August 2022.
• The committee reviewed the appropriateness of the
Board’s policy on diversity and expanded it accordingly.
Meetings
The number of meetings of the Nomination Committee
and attendance is set out on page 39 of the Corporate
Governance Report.
Only members of the Nomination Committee have the
right to attend meetings, but we may invite other Directors,
executives or advisers to attend all or part of any meeting
as appropriate.
Board changes
There were a number of Board changes during the year
as explained in the Corporate Governance Report [on
page 36. Three new independent, Non-Executive Directors
were appointed in August 2022 which coincided with the
resignation and retirement of Sir Michael Bunbury as Senior
Independent Director.
Report of the Nomination Committee
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Report of the Nomination Committee continued
Debra Barker is a seasoned international life sciences
executive with more than 25 years’ senior and board
experience from start-up biotech to big pharma companies,
having held a number of senior drug development,
strategic and operational roles in Novartis, Roche,
SmithKline Beecham and Knoll. Debra is currently Non-
Executive Director of three publicly listed biotechnology
companies: Destiny Pharma plc, BergenBio in Norway
and most recently, CureVac AG in Germany. Debra has a
Diploma in Pharmaceutical Medicine and received a MSc
in Immunology from the King’s College in London and a
Medical Degree from the Queens’ College, Cambridge, UK.
Benny Soffer, MD is Co-Founder and Chief Investment
Officer of Consonance Capital Management, a healthcare-
focused public equity investment management firm. He
previously completed a residency in internal medicine at
Yale and served in a variety of managerial roles at Yale-New
Haven Hospital. Dr Soffer is a Clinical Assistant Professor
of Medicine at Weill Cornell Medicine, receiving his MD at
Emory University and his MBA at Yale University. Benny
Soffer resigned from the Board on 31 January 2023 in order
to spend more time on his other business interests.
Andrew Smith is an internationally experienced chief
financial officer with strong financial and operational
experience in US, Swiss and UK-based biotech and
pharmaceutical companies. Andrew is currently Chief
Financial Officer of Santhera Pharmaceuticals, the Swiss-
based speciality pharmaceutical company, having previously
held a number of senior operational and financial roles
in companies including Allecra Therapeutics, Sucampo
Pharmaceuticals Inc., and Retroscreen Virology (Now
HVIVO Ltd). He is a Fellow of the Chartered Institute
of Management Accountants and a Chartered Global
Management Accountant. He studied business and
accounting at Liverpool John Moores University and
Durham University Business School.
The range of skills and experience of the newly appointed
NEDs are a welcomed change to the Arix Board and
serve to further reinforce and focus our investment
strategy, particularly following the creation of the Public
Opportunities Portfolio earlier this year, and we look
forward to benefitting from their international industry,
financial and operational expertise.
The Nomination Committee has worked throughout 2022
to ensure that the Board and its committees continue
to have the necessary balance of skills and appropriate
succession plans in place to ensure its continued
effectiveness. The Nomination Committee in conjunction
with the rest of the Board also keeps the necessary balance
of skills amongst management under regular review to
inform succession plans for executive roles.
In accordance with past practice, and the Code, all
Directors will be subject to re-election at each AGM.
Diversity Policy
A comprehensive review of the Board’s Diversity Policy was
reviewed in December 2022. The Policy acknowledges the
benefits of greater diversity, including gender diversity and
states that the Company remains committed to ensuring
that the Company’s Directors bring a wide range of skills,
knowledge, experience, backgrounds and perspectives.
All appointments will, however, continue to be on merit
against objective criteria, in the context of the overall
balance of skills and backgrounds that the Board needs
to maintain in order to remain effective. The objectives
of the Policy set out the process to be followed by the
Nomination Committee during the recruitment process
in order to ensure that an appropriately diverse pool of
candidates is considered to enhance the balance of skills
and backgrounds on the Board. The Board is satisfied that
the Policy is in line with its strategic priorities, as described
on page 13 and is looking to improve the Board’s diversity
with future appointments.
During the period under review, The Committee consulted
with a number of reputable external search consultants
before selecting Nurole to carry out a search for new
Non-Executive Directors. This process resulted in the
appointment of Debra Baker as a Non-executive director
and Senior independent Director of the Company.
Annual Effectiveness Evaluation
The performance of the Board, its Committees, the
Chairman and individual Directors were internally evaluated
in 2022, the outcomes of which are set out in more detail on
page 44.
Peregrine Moncreiffe
Chairman of the Nomination Committee
24 April 2023
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46 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
BOARD EFFECTIVENESS
Provision 21 of the Financial Reporting Council’s UK
Corporate Governance Code provides that Boards should
conduct a formal and rigorous annual evaluation of the
performance of the board, its committees, the chair and
individual directors. Provision 22 of the Code provides that
the Chair should act on the results of the evaluation by
recognising the strengths and addressing any weaknesses
of the board. Accordingly, in 2022, the Board conducted
an annual evaluation to consider its composition, diversity
and how effectively members work together to achieve
objectives.
Review of Board and Committees
This year we decided to carry out an internal review of
our Board’s effectiveness, supported by Kin Company
Secretarial (Kin) which provided the platform and some
input for the basis of our questionnaire-based approach.
Having onboarded three new Non-Executive Directors
in the latter half of 2022, we decided that it would be
appropriate to carry out an internal review to set a new
baseline.
The effectiveness of each of the Board’s committees were
taken into account as part of the evaluation and the output
will assist the Nomination Committee in its thinking as it
develops and keeps under review the composition of the
Board Committees in 2023. The review took the form of
an online questionnaire, designed with assistance from
Kin with input from the Chairman and Senior Independent
Director. Kin provided an anonymised report following the
evaluation and the Chairman, in discussion with the Board,
have agreed an action plan for 2023.
In addition to this review, during a private meeting of the
Non-Executive Directors, the Senior Independent Director
led an initial review of the Chairman’s performance, by way
of an additional questionnaire. Assisted by the company
secretary, the NEDS together with the SID discussed and
agreed the Chairman’s objectives for 2023.
Each Committee chair considers feedback for the
Committees for which they are responsible. Each
reviewed the effectiveness and processes to support their
Committees and introduced a number of changes for how
those Committees operate.
Stages of the Board Effectiveness Evaluation
August 2022
• Appointment of new
NEDs
December 2022
• Decision reached to
undertake an internal
Board effectiveness
evaluation and a plan
of action was
established to
support the process.
December 2022
• Both the Board
Effectiveness Review
and the Chairman’s
Evaluation
questionnaires were
drafted and
circulated to the
Board
January 2023
• Responses received
and reviewed by the
Company Secretary
and draft action plan
for 2023 prepared
and shared with the
Chairman and SID.
March 2023
• Board reviewed and
approved the
proposed action plan
for the year ahead
Report of the Nomination Committee continued
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47ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Key outcomes
The evaluation reviewed key areas of Board performance
which included:
• boardroom dynamics and processes;
• leadership Succession;
• strategy and Purpose; and
• board Diversity and Committee Composition.
Overall, the Board have a collaborative working
relationship and the recently appointed Directors have
been contributing positively to the overall effectiveness of
the Board. The key emerging themes from the evaluation
have highlighted a few key areas of focus which require the
Board’s attention and which the Board, together with the
Committee Chairs have agreed an action plan for 2023.
The broad areas in which the Board will continue to focus on
during 2023 will include:
• Determining the Company’s core purpose and setting
and agreeing an appropriate strategy to align with these
values.
• Determining the Company’s Investment Strategy and
rationale for Board-Level decision-making on Investments
and communicating this strategy to the Investment
Team.
• With input from the Nomination Committee, establishing
a sufficient succession plan for the Board, Executive and
senior management team.
• Keeping the Board’s Diversity Policy under review to
ensure it remains appropriate and evolves with the
legislation in this area.
Report of the Nomination Committee continued
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Customer: Arix Bioscience Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
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Customer: Arix Bioscience Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
48 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Andrew Smith
Chairman of the Audit and Risk Committee
Composition
Andrew Smith (Chair)
Peregrine Moncreiffe
Debra Barker
Dear Shareholders,
On behalf of the Board, I am pleased to present the Audit
and Risk Committee report for the year ended 31 December
2022.
The Committee is chaired by an independent non-executive
director and including the Committee chair, it is comprised
solely of independent non-executive directors.
The Board considers that I have recent and relevant
financial experience as recommended under Provision 24
of the UK Corporate Governance Code (the Code) as it
applies to the Company. In line with the Code, the Audit and
Risk Committee as a whole is deemed to have competence
relevant to the sector in which the Company operates.
The Committee’s role is to assist the Board with the
discharge of its responsibilities in relation to internal and
external audits and controls, including reviewing the
Group’s annual financial statements, considering the
scope of the annual audit and the extent of the non-
audit work undertaken by external auditors, advising on
the appointment of external auditors and reviewing the
effectiveness of the internal control systems in place within
the Group.
During the year in review the Committee has met once
during my chairmanship and five times in 2022 prior to
my appointment on 10 August. Further details on the
activities of the Committee during the year and how it has
discharged its responsibilities are provided in the report
below.
Andrew Smith
Chairman of the Audit and Risk Committee
24 April 2023
Duties and responsibilities
The Audit and Risk Committee’s duties and responsibilities
are set out in its terms of reference which are available on
the Company’s website.
Internal controls and risk management
• Monitor and review the adequacy and effectiveness
of the Company’s internal financial controls and risk
management systems.
• Review and recommend to the Board the disclosures in
the Annual Report concerning internal controls and risk
management.
• Promote sound risk management and internal control
systems.
• Monitor and keep under review the policies and overall
process for identifying and assessing business risk.
Whistleblowing, fraud, bribery and other compliance
• Review the Company’s arrangements for its employees
and contractors to raise concerns in confidence.
• Review procedures for detecting fraud and preventing
bribery.
• Review the Company’s code of corporate conduct/
business ethics.
Financial and narrative reporting
• Monitor the integrity of the financial statements.
• Review and report to the Board on significant financial
issues and judgements.
• Review and challenge accounting policies, methods used
to account for significant or unusual transactions, clarity
and completeness of disclosure.
External audit
• Recommend the appointment, reappointment or removal
of the auditors, including conducting a tender for new
appointments.
• Oversee the relationship, make recommendations on their
remuneration, approve terms of engagement and review
independence and objectivity.
• Meet regularly without management present.
• Develop policy on the supply of non-audit services.
• Ensure the audit contract is tendered at least every ten
years.
• Review and approve the audit plan.
• Review the findings of the audit.
Report of the Audit and Risk Committee
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49ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Report of the Audit and Risk Committee continued
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Internal audit
To review the need for an internal audit function
• If an internal audit function is appointed:
– Approve the appointment or termination of the head of
internal audit.
– Consider and approve the Terms of Reference for the
internal audit.
– Monitor and review the operation and the effectiveness.
– Review and assess the internal audit plan and reports.
Meetings and attendees
The Audit and Risk Committee has met six times during the
year. The Audit and Risk Committee will normally meet no
fewer than three times a year with further meetings being
called as required.
The external auditors are invited to attend the majority of
the meetings. Outside of the formal meeting programme,
the Audit and Risk Committee chairman maintains a
dialogue with key individuals involved in the Company’s
governance, including the Chairman, the Group Head of
Finance and the external audit lead partner.
Activity during the year
Matters discussed during the year have included:
• Reviewing the Committee’s terms of reference and
recommending changes to the Board.
• Reviewing the Company’s internal controls and risk
management processes and procedures and assessing
and keeping under review their appropriateness.
• Reviewing the Company’s Whistleblowing Policy.
• Reviewing the Company’s Treasury Policy for
recommendation to the Board.
• Considering the Group’s policy on the provision of non-
audit services by the external auditors.
• Reviewing the going concern and viability assessment of
the Company and the Group.
• Reviewing the external auditor’s audit plan, process and
scope.
• Reviewing the independence of the external auditor.
• Reviewing the significant issues in the external audit
report.
• Reviewing the Annual Report and Accounts and
recommending their approval by the Board.
• Reviewing the need for an internal audit function and
concluding that it is not required.
Significant issues considered in relation to the financial statements
Significant issues and accounting judgements are identified by the finance team and are considered and reviewed by the
Audit and Risk Committee. The significant issues considered by the Committee in respect of the year ended 31 December
2022 are set out in the table below:
Significant issues
and judgements How the issues were addressed
Valuation of unlisted
Investments
The Audit and Risk Committee reviewed management’s determination of the valuations
of the unlisted investments, including the valuation methodology applied. The Committee
concluded that the valuations of the unlisted investments were properly prepared in
accordance with the stated accounting policy and the evidence available.
Calculation of
share-based payment
expense
The Audit and Risk Committee considered management’s calculation of the share-based
payment expense relating to management options and the Executive Incentive Plan,
including the assumptions made regarding volatility and the risk-free interest rate. The
Committee was satisfied that the expense had been calculated appropriately.
Presentation of the
Annual Report
The Audit and Risk Committee reviewed management’s presentation of the Annual
Report. The Committee noted that the inputs into, and disclosures and accounting policies
included, in the Annual Report are reviewed by people with relevant financial experience
and knowledge of the business, up to and including the Audit and Risk Committee. The
Committee concluded that management has presented the report in a suitable manner,
and that it is fair, balanced and understandable.
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50 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Risk management and internal control
The Board has overall responsibility for setting the
Group’s risk appetite and ensuring there is an effective
risk management framework to maintain levels of
risk within this risk appetite. The Board has, however,
delegated responsibility for reviewing the risk management
methodology and effectiveness of internal control to the
Audit and Risk Committee. The Audit and Risk Committee
provides oversight and advice to the Board on current risk
exposures and future risk strategy. Further details of the
Group’s risk management approach, structure and principal
risks are set out in the Strategic Report on pages 27 to 31.
The Group’s system of internal control comprises entity-
wide high level controls, controls over business processes
and centre level controls. Policies and procedures are
clearly defined. Levels of delegated authority have been
communicated across the Group and management has
identified the key operational and financial processes
which exist within the business and implemented internal
controls over these processes, in addition to the higher level
review and authorisation based controls. Policies cover
defined lines of accountability and delegation of authority;
financial reporting procedures; and preparation of monthly
management accounts; these facilitate the accuracy and
reliability of financial reporting and govern the preparation
of financial statements.
The Board is ultimately responsible for the Group’s system
of internal controls and risk management. It has discharged
its duties in this area by:
• holding regular Board meetings to consider the matters
reserved for its consideration;
• receiving regular management reports which provide an
assessment of key risks and controls;
• scheduling annual Board reviews of strategy, including
reviews of the material risks and uncertainties facing the
business;
• ensuring there is a clear organisational structure, with
defined responsibilities and levels of authority;
• ensuring there are documented policies and procedures in
place; and
• reviewing regular reports containing detailed information
regarding financial performance, rolling forecasts, actual
and forecast covenant compliance and financial and non-
financial KPIs.
In reviewing the effectiveness of the system of internal
controls, the Audit and Risk Committee:
• reviews the risk register compiled and maintained by
senior management within the Group and questions and
challenges where necessary;
• reviews the system of financial and accounting controls
regularly; and
• reports to the Board on the risk and control culture within
the Group.
No significant failings or weaknesses were identified.
Internal audit
The Group does not have an internal audit function. The
Audit and Risk Committee reviews the need for an internal
audit function at least annually and following the most
recent review, the Committee has determined that due to
the small size of the Group, it does not warrant having an
internal Audit function at this time.
External auditors
The Audit and Risk Committee is responsible for overseeing
the Group’s relationship with its external auditors.
This includes the ongoing assessment of the auditors’
independence and the effectiveness of the external
audit process, by regular meetings and assessment of
non-audit engagements. The results of this inform the
Committee’s recommendation to the Board as to the
auditors’ appointment (subject to shareholder approval) or
otherwise.
Appointment and tenure
The Board appointed BDO LLP (BDO) as the Company’s
external auditors in June 2020. BDO was recommended
to the Board for appointment by the Audit and Risk
Committee following a competitive tender process
conducted in accordance with the Financial Reporting
Council’s best practice for Audit Tenders. The current
statutory audit partner for BDO is therefore in their
third year.
Regulations require the rotation of the lead audit partner
every five years for a listed client. Therefore, we expect a
new lead audit partner to be selected for the 2025 audit.
In accordance with retained EU legislation, the Committee
intends to put the external audit out to tender at least
every ten years.
Non-audit services
The engagement of the external audit firm to provide non-
audit services to the Group can affect the independence
assessment, and the Group has therefore adopted a policy
which conforms to the Revised Ethical Standard 2016
published by the Financial Reporting Council. Under the
policy the engagement of the external auditors to provide
statutory audit services, certain assurance, taxation and
certain advisory services with fees of less than £5,000 is
Report of the Audit and Risk Committee continued
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51ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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pre-approved. Any engagement of the external auditors to
provide permitted services above £5,000 is subject to the
specific approval of the Audit and Risk Committee.
The policy recognises that certain non-audit services may
not be carried out by the external auditors (in accordance
with the EU Statutory Audit regime).
During the year ended 31 December 2022, BDO provided
non-audit services in relation to reviewing the Group’s
Interim financial statements (£18,400); and performing
an FCA CASS Audit of Arix Capital Management Limited,
a 100% subsidiary of Arix Bioscience plc (£5,050). The fees
paid to BDO for non-audit services during the year totalled
£23,400 representing 14% of the total audit fee.
Whistleblowing
The Group has adopted procedures where employees
may, in confidence, raise concerns relating to possible
improprieties in matters of financial reporting, financial
control or any other matter. The whistleblowing policy
applies to all Group employees. The Audit and Risk
Committee is responsible for monitoring the Group’s
whistleblowing arrangements and the Board reviews
the policy periodically. The Audit and Risk Committee, on
behalf of the Board, reviewed the Group’s whistleblowing
arrangements in December 2022 – and it was considered
that they were still appropriate in their current form.
Andrew Smith
Chairman of the Audit and Risk Committee
24 April 2023
Report of the Audit and Risk Committee continued
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52 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Debra Barker
Chair of the Remuneration Committee
Composition
Debra Barker (Chair from 10 August 2022)
Peregrine Moncreiffe
Benny Soffer (from 10 August 2022)
Maureen O’Connell (Chair up to 10 August 2022)
Sir Michael Bunbury (member up to 10 August 2022)
Annual Statement by the Chair of the
Remuneration Committee
Dear Shareholders,
As the Chair of the Remuneration Committee (the
“Committee”) I am delighted to introduce our 2022
Directors’ Remuneration Report.
This is my first report as Chair of the Committee having
joined the Board as Senior Independent Director and
succeeding Maureen O’Connell on 10 August 2022. I would
like to thank Maureen for her support over the course of the
year.
Board changes
During the year, there were a number of Non-Executive
Director changes, as set out below:
• Andrew Smith and Benny Soffer joined the Board as
Non-Executive Directors on 10 August 2022. Benny Soffer
subsequently stepped down effective 31 January 2023.
• I joined the Board as the Senior Independent Director on
10 August 2022.
• Sir Michael Bunbury stepped down from the Board and
from the role of Senior Independent Director on 9 August
2022.
No payments for loss of office were made to Non-Executive
Directors that stepped down from the board.
Pay for performance
2022 saw a decline in NAV from £255million at the end
of 2021 to £226 million at 31December 2022. The Gross
Portfolio declined in value to £99.6 million, driven largely
by a decline in valuation in our listed holdings. Whilst
recognizing this disappointing financial performance, the
year saw continued progress on an operational basis with
the aquisition of TwelveBio by Ensoma, concurrent with
Ensoma’s Series B financing, the reverse merger of Disc
Medicine with Gemini Therapeutics and Imara’s reverse
merger with Enliven Therapeutics.
2022 Annual bonus
Bonus awards for 2022 reflect performance delivered in the
year as outlined above, with the Remuneration Committee
determining that no bonus pay-out was due in respect of
financial performance of the year (weighted at 50% of
the bonus opportunity), with a bonus of 80% of maximum
due in respect of the non-financial element, reflecting the
continued progress being made on an operational basis,
as noted above. This resulted in an overall bonus of 40%
of maximum for the CEO, with further details shown on
page 58. The Committee considers the level of pay-out is
reflective of the individual performance of Robert Lyne and
the overall performance of the Company in the year and
therefore determined that no discretion should be exercised
to reduce the formulaic outcome.
2020 EIP awards
The 2020 EIP award was based on compound share price
growth (60%) and NAV per share growth (40%) targets
to 31 December 2022. Performance against the original
targets set, which were set under the leadership of the
previous Executive Chair and a significantly different point
in the economic cycle, resulted in a formulaic outcome of
23.2% of maximum.
Whilst conscious of the formulaic out-turn of the 2020
EIP awards, following extensive discussion with the Board
(excluding Robert Lyne), which unanimously supported the
approach, the Committee determined that it would be
appropriate to exercise its discretion to increase the vesting
under this award to 43.2% of maximum, based on the
following three key principles:
1. To reward the CEO for his performance in the role to
date.
2. To increase the alignment of the CEO with shareholders.
3. To support in the retention of the CEO.
Further details of the Committee’s considerations under
each of the three principles noted above are set out below.
1. To reward the CEO for his performance in the role to
date
Robert Lyne joined Arix in 2017 and was appointed to the
Board in April 2021. Since stepping up as CEO, Robert
has been a constant stabilizing force for the Company
delivering strong operational performance through a period
of significant change for the company, with a material
change in the shareholder base, and a rapidly evolving
macro-economic environment. Highlights of Robert’s key
achievements since his appointment to the Board include:
• Strengthening the reputation of the Company with key
stakeholders, including through a re-organisation of key
internal functions related to investor and public relations.
Directors’ Remuneration Report
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Directors’ Remuneration Report continued
• Leading a successful investor outreach, resulting in two
new significant investors into the business over the course
of FY22.
• Completing a successful cost reduction exercise following
appointment, resulting in the cost base being lowered by
25%.
• Playing a pivotal role in ensuring the retention and
successful recruitment of key personnel to the business,
including (i) a pivotal role in the recruitment and retention
of members of the investment team that are considered
key talent for the future; and (ii) developing staff in
the back office and multi-skilling them to cover wider
responsibilities, including investor relations.
• Managing the company through a period of significant
change in Director composition, with 10 changes in
Directors over the past 22 months.
2. To increase the alignment of the CEO with
shareholders
Since joining Arix in 2017, there has not been any vesting
under EIP awards granted to Robert Lyne, with historic
awards severely impacted by the share price growth
targets being set by reference to the IPO / fund raising
prices. Whilst there has been no vesting under the long-
term incentive scheme, Robert as CEO acknowledges
the importance of alignment with shareholders and has
personally purchased approximately 65,000 shares in the
Company.
The Committee believes alignment to shareholders,
through the building of a shareholding, is an important
factor in successfully motivating management and as such
has sought to reward the CEO’s performance in a way
that further aligns the CEO with shareholders, both on the
upside and on the downside.
In order to further support this principle, the Committee
has determined that a two-year holding period will apply
to any shares vesting under the 2020 EIP, a feature not
originally attached to the award made to Robert on
account of it having been granted prior to his appointment
to the Board. Robert will therefore not be able to sell any
shares vesting from the award (subject to settling any
taxes due) until 30 June 2025.
3. To support in the retention of the CEO
At the time Robert Lyne was appointed to the Board, his
salary was set below that of his predecessor in recognition
that this was his first CEO role. Over the course of the last
22 months, the CEO has enhanced his reputation both with
shareholders and across industry.
Whilst the Board is confident that Robert is both
committed to and is best placed to deliver Arix’s long-
term strategic goals, it is acutely aware that Robert has
gained invaluable experience as the CEO of Arix and if
the remuneration arrangements in place do not continue
to motivate and align Robert with shareholders over the
longer-term, there is a risk that he could move to a role
within an alternative asset management firm that would
benefit from significantly increased upside potential
through mechanisms such as carried interest that are not
generally accepted in the listed market, but are a common
feature of competitor firms.
Reflecting on the above principles, the Committee
considered that increasing the vesting under the EIP
was the most effective route to recognising the CEO’s
performance since appointment while still ensuring
alignment with shareholders on the basis the EIP is paid in
Company shares.
The Committee has been in dialogue with the Company’s
largest shareholders, who have expressed support for the
proposal set out above. I would like to place on record my
thanks to shareholders for engaging proactively with the
Committee on this issue.
2022 EIP awards
As set out in the 2021 Annual Report and Accounts,
reflecting external uncertainty at the time of writing
that report, the Remuneration Committee were still in
the process of discussing the performance measures and
targets to be attached to the 2022 EIP award. During the
year the Committee conducted a thorough review of the
performance measures used for the EIP and determined
that TSR and NAV growth continue to be the best metrics
available to measure long-term performance at Arix.
However, reflecting the current significant cash balance of
the total portfolio, the Committee split the NAV metric,
such that 40% of the metric is based on invested NAV per
share growth (driving performance across the invested
portfolio), with the balance, 20%, based on overall NAV per
share growth (which measures NAV performance across
the portfolio, including incentivising the right investments
in the future portfolio). The table below sets out the
performance measures and targets that apply to the 2022
EIP award:
Performance measure Weighting Threshold
(25% vesting)
Maximum
(100% vesting)
Absolute TSR growth 40% 5% p.a. 15% p.a.
NAV per share growth 20% 5% p.a. 12% p.a.
Invested NAV per share growth 40% 7% p.a. 15% p.a.
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54 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
In determining the performance targets, the Committee
sought to ensure that the award would be both
stretching and achievable to ensure that participants
are appropriately incentivised to achieve the Company’s
strategic goals.
The Committee is mindful of windfall gains and as such, the
Committee will review the 2022 EIP award on vesting to
ensure against windfall gains. The Committee will disclose
the factors considered in determining whether any windfall
gains have arisen at the time of vesting.
Implementation in 2023
For 2023, Robert Lyne’s salary will be increased by 5% to
£315,000. The increase is below the average increase for
the wider workforce, albeit noting the relative limited size of
the workforce at Arix.
He will remain eligible for an annual bonus, with the
maximum opportunity unchanged at 125% of salary. The
2023 annual bonus will be based on the achievement of
specific financial, strategic and personal goals, which will be
disclosed retrospectively as part of the 2023 annual report
due to targets being considered commercially sensitive.
An award of up to 225% of salary will be made under the
EIP. In line with the Directors’ Remuneration Policy, a two-
year post-vesting holding period will apply to the EIP award.
Details of the performance targets attached to the 2023
EIP award is set on page 66.
Alignment of executive and employee pay
Consistent with best practice and the 2018 UK Corporate
Governance Code, the Committee considers pay and
employment conditions across the Company when
reviewing the remuneration of the CEO and other senior
employees.
Arix has a small number of employees and as a result is
not required to publish the ratio of the CEO remuneration
relative to that of employees more widely. The Committee
is confident that there is considerable alignment between
the structure of the CEO pay and the arrangements in
place for other employees, with all employees participating
in a similar bonus structure.
While the Company does not directly consult with
employees as part of the process of reviewing executive pay
and formulating the Remuneration Policy, the Committee
receives updates from the CEO on his discussions and
reviews with senior management and employees.
Looking ahead
Our new Remuneration Policy (“Policy”) was approved by
shareholders at the 2022 Annual General Meeting (“AGM”)
with 99.9% votes cast in favour. While the Policy may apply
for a period of up to three years, the Committee regularly
reviews the appropriateness of the pay arrangements to
ensure it continues to support the Company in meeting its
key strategic goals.
Given the uniqueness of Arix’s business, where we compete
with firms that are typically private and operate a very
different remuneration structure (often driven through
carried interest arrangements), over the course of the year,
the Committee intends to review the current Policy, and
in particular the use of an EIP which requires setting of
long-term performance targets which are not fully aligned
to the Group’s investment life cycle, to ensure that it
remains fit for purpose. Where any changes are considered
appropriate, the Committee will consult with key
shareholders prior to implementing the proposed approach.
I hope that you find the information contained in this report
helpful, thoughtful and clear. The Committee continues
to welcome dialogue with shareholders on remuneration
matters and any questions or feedback you have would be
gratefully received.
At the forthcoming AGM, shareholders will be asked to
approve an advisory resolution on the contents of the
Annual Report on Remuneration. I hope the Committee can
count on your continued support.
Debra Barker
Chair of the Remuneration Committee
24 April 2023
Directors’ Remuneration Report continued
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Remuneration snapshot
The following table sets out how the Remuneration Policy will be implemented in 2023 for the CEO.
Element of pay Implementation for the year ending 31 December 2023
Base salary £315,000 (5% increase from prior year, below the average increase for the wider
workforce)
Benefits Eligible to receive private health cover, life assurance, income protection and a company
car or car allowance
Pension contribution 7.5% of salary, in line with the wider workforce
Annual bonus
Maximum annual bonus opportunity of 125% of salary.
Bonus for 2023 will be based on a range of challenging financial, strategic and personal
measures aligned with the Company’s KPIs, as set out in the table below. Specific targets
will not be disclosed upfront because the Remuneration Committee consider forward
looking targets to be commercially sensitive. However, the Committee intends to disclose
these retrospectively in next year’s Remuneration Report to the extent that they do not
remain commercially sensitive.
Performance measure Weighting
Financial (NAV per share and share price growth) 50%
Strategic/personal measures 50%
Up to 50% of the annual bonus will be deferred and invested into shares which must be
held for a period of three years.
Long-term incentive
Maximum EIP opportunity of 225% of salary.
EIP awards for 2023 will be based upon share price growth, NAV growth and Invested NAV
per share growth, as set out below.
Threshold Maximum
Performance measure Weighting (25% of maximum) (100% of maximum)
Absolute TSR growth 40% 5% p.a. growth 15% p.a. growth
NAV per share growth 20% 5% p.a. growth 12% p.a. growth
Invested NAV per share growth 40% 7% p.a. growth 15% p.a. growth
Any shares which vest will be subject to a two-year post-vesting holding period.
Shareholding requirements The CEO is required to build a shareholding equivalent to 225% of basic salary.
A post-cessation shareholding requirement also applies such that the CEO will normally
be required to hold shares with a value of 225% of basic salary (or actual shareholding,
excluding personal investment, on cessation if lower) for two years post cessation.
NED Fees Fees for 2023 will be as follows (no change):
• Non-Executive Chairman: £150,000.
• Senior Independent Director: £10,000.
• Non-Executive Director: £65,000.
• Chairs of Audit and Risk, Remuneration and Nomination Committees: £10,000.
• Chair of Board Investment Committee: £20,000.
• Member of the Audit Committee: £10,000.
Directors’ Remuneration Report continued
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56 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Annual Report on Remuneration
This section sets out details of the remuneration of the
Executive and Non-Executive Directors received during the
financial year ended 31 December 2022 and also describes
the operation of the Remuneration Committee.
Remuneration Committee
Membership
Debra Barker is currently the Chair of the Committee,
succeeding Maureen O’Connell on 10 August 2022. Debra
has several years’ experience of serving on remuneration
committees. The other members of the Committee are
Peregrine Moncreiffe and Benny Soffer (from 10 August
2022). During the year, Sir Michael Bunbury and Maureen
O’Connell (both until 10 August 2022) also served on the
Remuneration Committee.
The Committee met 3 times during the year under review.
Meeting attendance is shown on page 39 in the Corporate
Governance Report.
The Board considers a majority of the members of the
Committee to be independent when considered against
the UK Corporate Governance Code (“the Code”). The CEO
attended meetings of the Committee by invitation, but
was not present when matters relating to his remuneration
were discussed.
Role of the Remuneration Committee
The Remuneration Committee’s responsibilities are set out
in its Terms of Reference which are available on request to
shareholders and on the Company’s website.
The Committee’s role includes:
• Setting the Remuneration Policy for all Executive
Directors of the Company, the Chairman of the Board
and key management (being the Executive Committee
(including the Company Secretary) and all personnel
receiving an annual basic salary of £250,000 or more).
• Within the terms of the Remuneration Policy and in
consultation with the Chairman of the Board and/or the
CEO, where appropriate, determining the total individual
remuneration package of the CEO, the Chairman and
other designated senior executives including bonuses,
incentive payments and share option or other share
awards.
• Approving the design of, and determining targets for,
any performance-related pay schemes operated by the
Company and approving total annual payments made
under such schemes.
• Ensuring that contractual terms on termination, and
any payments made, are fair to the individual and
the Company, that failure is not rewarded, that the
duty to mitigate loss is fully recognised and that any
payments are consistent with the shareholder-approved
Remuneration Policy.
In carrying out its duties the Remuneration Committee
takes into account any legal and regulatory requirements,
including the Code and the UK Listing Rules, as well as
good practice guidance issued by investors and investor
representative bodies.
The Committee believes that its approach to Executive
Director remuneration is consistent with the factors set out
in Provision 40 of the Code:
• Clarity: the Remuneration Policy and its implementation
are set out in extensive detail in this report;
• Simplicity: Remuneration is based on a mix of fixed and
variable pay, and is well understood by both participants
and shareholders. Incentives involve an annual bonus
scheme based on the achievement of key corporate
objectives, and a long-term plan which rewards the
generation of long-term value for shareholders;
• Risk: Performance targets for incentive schemes are
calibrated carefully to ensure that the ultimate rewards
will correspond closely with an appropriate level of
performance. For example, EIP awards will only vest if
a certain level of share price; invested NAV per share
growth; and NAV per share growth is achieved. Malus and
Clawback provisions apply to both the Annual Bonus and
EIP;
• Predictability: annual participation in the bonus
scheme and the EIP is capped (as a percentage of basic
salary), and awards cannot exceed these levels. Our
Remuneration Policy contains details of threshold, target
and maximum opportunity levels under the Annual Bonus
and EIP, with potential outcomes in different performance
scenarios illustrated by the charts on page 61 of the 2021
Directors’ Remuneration Report. The ultimate value of
any vested EIP award will depend on the share price
at the time which cannot be predicted but is simple to
calculate;
• Proportionality: there is a clear link between the delivery
of strategy and individual awards through the annual
bonus scheme. The EIP rewards the successful delivery of
long-term outperformance. If there is little or no growth
in share price or NAV, awards will not vest; and
• Alignment to culture: Arix’s high performance culture and
the awareness within the Company of what ultimately
drives shareholder value are reflected in the incentive
schemes operated and the choice of performance
metrics.
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Key matters considered by the
Remuneration Committee
Key issues reviewed and discussed by the Remuneration
Committee during 2022 included:
• Review and approval of the 2022 Directors’ Remuneration
Report.
• Review of Executive Director and senior manager salaries
for 2023.
• Review of Executive Director and senior manager bonuses
and equity incentive awards for 2022.
• Pay benchmarking for key roles within the organisation
and a review of alternative incentive structures.
Advisers to the Committee
Following a competitive tender to advise on all aspects of
the Directors’ Remuneration Policy and its implementation,
Deloitte were appointed as advisers to the Remuneration
Committee on 30 June 2020.
The Committee is satisfied that the advice received during
the year was objective and independent. Deloitte is a
founding member of the Remuneration Consultants Group.
Deloitte received fees of £85,700 for its advice during the
year (fees charged on a costs incurred basis). Deloitte also
provided Group tax advice during the year.
Single figure table – Executive Directors (audited)
Basic salary Benefits Annual bonus EIP Pension Other Total
Total
fixed pay
Total
variable pay
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Robert Lyne
1
300 188 11 7 150 143 218 – 22 14 – – 702 352 333 209 368 143
1
Joined the Board on 29 April 2021 as Interim CEO and was appointed as Chief Executive Officer on 6 October 2021. 2021 values shown above relate to remuneration
received since appointment to the Board.
• Basic salary: amount earned for the year.
• Benefits: the taxable value of benefits received in
the year, including life assurance, long-term sickness
insurance, private healthcare and company car cash
allowance.
• Pension: the value of the Company’s contribution in the
year: 7.5%.
• Annual Bonus: see separate section below for explanation
of determination of bonus amounts.
• Subject to Board approval, the Company allows its
Executive Directors to hold non-executive positions
outside of the Company that complement and
enhance their current role. Any fees may be retained
by the Director. Robert Lyne did not hold any external
directorships during the year.
Single figure table – Non-Executive Directors (audited)
Fees Benefits Other Total Total fixed pay
Total
variable pay
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current Non-Executive Directors
Peregrine Moncreiffe
1
150 101 – – 150 101 150 101 –
Isaac Kohlberg
1
85 44 – – 85 44 85 44 –
Maureen O’Connell
1
85 44 – – 85 44 85 44 –
Debra Barker
2
38 – – – 38 – 38 – –
Andrew Smith
2
33 – – – 33 – 33 – –
Benny Soffer
2
30 – – – 30 – 30 – –
Former Non-Executive Directors
Sir Michael Bunbury
3
82 20 – – – 1 82 21 82 21 – –
1
Joined the Board on 29 April 2021. 2021 remuneration relates to fees received between 29 April 2021 and 31 December 2021.
2
Joined the Board on 10 August 2022. 2022 remuneration relates to fees received between 10 August 2022 and 31 December 2022.
3
Joined the Board on 6 October 2021 and stepped down from the Board on 10 August 2022. 2021 remuneration relates to fees received between 6 October 2021 and 31
December 2021 and 2022 remuneration relates to fees received between 1 January 2022 to 10 August 2022. Other relates to use of office.
Directors’ Remuneration Report continued
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58 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Annual bonus payout table (audited)
The CEO was eligible for a bonus of up to 125% of base salary. The annual bonus for 2022 was based on a range of
challenging financial, strategic and personal measures aligned with the Company’s KPIs. The table below sets out
performance against the targets set by the Committee.
Metric
Key factors / achievements considered by the
Remuneration Committee Outcome
Financial (50%) In considering the financial element of the bonus
(weighted at 50%) the Committee took into account:
• Net Asset Value per share performance;
• Total shareholder returns and share price over the
year;
• Operational costs.
Notwithstanding the operational costs
being delivered within the approved
target, the Committee agreed that due to
the 9.5% decline in NAV and 11.9% decline
in share price over the year, this element of
the bonus should lapse in full.
Non-financial
(50%)
• Key role, as the sole full-time executive on the
Board, in managing the Company’s relationship
with shareholders and corporate partners during
the course of extensive shareholder and wider
stakeholder engagement.
• Pivotal in ensuring the retention and continued
development of key personnel.
• Undertook successful investor outreach, further
developing the reputation of the Company with both
new and existing shareholders. Key achievements
include bringing new shareholders into the Company
who have been strong buyers in the market.
• Supporting the successful IPO of Disc Medicine in
December 2022.
The Committee considers that Robert
Lyne has been instrumental in ensuring
operational stability within the
business and continuing to develop the
relationship of the Company with external
stakeholders.
The Committee considered that
achievement against the non-financial
element of the business should be 80% of
maximum.
Outcome (percentage of maximum annual bonus) 40%
The Committee considered the appropriateness of the annual bonus outcome for Robert Lyne in the context of the overall
Company performance and his individual performance and determined that the bonus outcome was appropriate.
LTIPs vesting in the year (audited)
Awards were made to previous executive directors in 2020 under the EIP. Robert Lyne received a grant as part of the 2020
EIP award, although he was not an executive director at that time. The performance against the targets is set out in the
table below.
Metric Weighting Threshold Maximum Actual
Level of vesting
(% of elements)
Compound share price
growth 60% 7% p.a. growth 21% p.a. growth 9 38.6%
NAV per share growth 40% 7% p.a. growth 17% p.a. growth Below threshold 0%
Formulaic outcome 100% 23.2%
As set out in further detail in the Chair’s statement, the
Committee, with the full Board’s support, determined that
it would be appropriate to exercise its discretion as provided
for in the Directors’ Remuneration Policy to increase the
vesting under this award to 43.2% of maximum, based on
the following three principles:
1. To reward the CEO for his performance in the role to
date.
2. To increase the alignment of the CEO with shareholders.
3. To support in the retention of the CEO.
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As the award was granted to Robert Lyne prior to being
appointed to the Board, the 2020 EIP would ordinarily
not be subject to a post-vesting holding period. However,
in order to further support the alignment and retention
principles noted above, the Committee determined that a
two year holding period will apply to vested awards.
Further details in relation to the rationale are set out in the
Chair’s statement.
The award value shown in the single figure is based on
the average share price over the last three months of the
financial year ended 31 December 2022 of £1.07. 24% of the
value of this award is attributable to the growth in share
price since grant.
Scheme interests awarded in 2022 (audited)
During the year ended 31 December 2022, the following Directors were awarded nil-cost options under the EIP, details of
which are summarised below.
Name Date of grant Basis of award
Number of
shares
Award
price
1
Vesting date
Robert Lyne 30 November 2022 225% of salary 636,792 £1.27 1 December 2025
Performance measure Weighting
Threshold
(25% of maximum)
Maximum
(100% of maximum) Performance period
Absolute TSR growth 40% 5% p.a. growth 15% p.a. growth
1 January 2022 to
31 December 2024
NAV per share growth 20% 5% p.a. growth 12% p.a. growth
Invested NAV per share growth 40% 7% p.a. growth 15% p.a. growth
1
Starting price based on the 30 day rolling average to the start of the performance period.
The Committee is mindful of windfall gains and as such, the Committee will review the 2022 EIP award on vesting to
ensure against windfall gains. The Committee will disclose the factors considered in determining whether any windfall
gains have arisen at the time of vesting.
Any awards vesting will be subject to a two-year holding period.
Payments for loss of office/payments to
past Directors (audited)
During the year no payments for loss of office or payments
to past Directors were made.
Executive Directors’ shareholdings and
share interests (audited)
The interests of Executive Directors’ in the Company as at
31 December 2022 (or, if earlier, the date of stepping down
from the Board) are shown in the table below. Robert Lyne is
required to build a shareholding equivalent to 225% of basic
salary. This shareholding requirement was not met at the
end of the financial year given his recent appointment to the
Board.
Executive Directors will normally be required to hold shares
with a value of 100% of their incumbent shareholding
requirement (or their actual shareholding, excluding
personal investment, on cessation if lower) for two years
post cessation as an Executive Director. The Committee
retains the discretion to operate this policy flexibly and
waive part or all of the policy, for example in compassionate
circumstances. No options were exercised during the year.
Name
Ordinary shares
held
2020 EIP
Awards
(no longer
subject to
performance
conditions)
2021 EIP
Awards
(unvested)
1
2022 EIP
Awards
(unvested)
1
Shareholding
as % of basic
salary
2
Robert Lyne 65,221 203,764 352,335 636,792 62.1%
1
Awards are nil-cost options. The 2021 and 2022 EIP Awards include performance conditions which must be met prior to vesting. Details of the specific performance
targets in place for each grant are included in the relevant year’s Annual Report on Remuneration.
2
Reflects value of ordinary shares, as well as value of 2020 EIP awards no longer subject to performance conditions on a net of tax basis, calculated at closing share price
on 31 December 2022 (£1.075).
There has been no change in the Executive Directors’ shareholdings since the balance sheet date.
Directors’ Remuneration Report continued
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60 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Non-Executive Directors’ shareholdings (audited)
Non-Executive Directors are not subject to a shareholding requirement. Details of their interests in Ordinary Shares in the
Company are set out below:
Name
Shareholding as at
31 December 2022
Peregrine Moncreiffe 259,000
Isaac Kohlberg 0
Maureen O’Connell 0
Debra Barker 0
Andrew Smith 0
Benny Soffer 0
Sir Michael Bunbury
1
40,000
1
Reflects position as at the date of his departure from the Board (10 August 2022).
Since the Balance Sheet Date, Peregrine Moncreiffe’s holdings have increase from 259,000 to 459.000 following the
purchase of 200,000 shares on 6 February 2023.
Comparison of overall performance and pay
The graph below shows the value of £100 invested in the Company’s shares since listing in February 2017 compared to
the FTSE SmallCap index (excluding investment trusts) and the XBI. Although Arix is not a member of the FTSE SmallCap
index, the index has been chosen as a broad equity market index, the constituents of which include companies of a similar
size and scale to Arix. The XBI has been chosen as this is reflective of the industry in which we operate.
Comparison of overall performance and pay
Source: Datastream (Thomson Reuters)
0
25
50
75
100
125
150
175
200
225
Dec-16 Dec-17
Dec-18
Dec-19 Dec-20 Dec-21
Arix Bioscience FTSE Small Cap (excluding Investment Trusts)
XBI
Dec-22
Directors’ Remuneration Report continued
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CEO – historic remuneration information (audited)
Robert
Lyne
2022
£’000
Robert
Lyne
2021
£’000
Naseem
Amin
2021
£’000
Naseem
Amin
2020
£’000
Joe
Anderson
2020
£’000
2019
£’000
2018
£’000
2017
£’000
Single figure total 701 352 97 266 417 737 633 1,726
Annual variable against maximum
opportunity 40% 40% N/A 100% 0% 50% 75% 80%
EIP vesting rates against maximum
opportunity 43% 0% N/A N/A N/A N/A N/A N/A
Comparison of Directors’ and employees’ pay
The table below sets out the annual percentage change in each Director’s salary/fees, benefits and annual bonus between
the year ended 31 December 2022 and the year ended 31 December 2020, and the average percentage change in the same
remuneration over the same periods in respect of the employees of the Company on a full-time equivalent basis.
The average employee change has been calculated by reference to the median of employee pay.
Debra Barker, Andrew Smith and Benny Soffer were appointed to the Board and Sir Michael Bunbury stepped down from
the Board during the year ended 31 December 2022. Accordingly, they have been excluded from the table below.
Peregrine Moncreiffe, Sir Michael Bunbury, Isaac Kohlberg and Maureen O’Connell were appointed in 2021.
Average
employee
Robert
Lyne
1
Peregrine
Moncreiffe
2
Isaac
Kohlberg
2
Maureen
O’Connell
2
Salary / fees 2022 13% 6% 0% 29% 29%
2021 4% N/A N/A N/A N/A
2020 5% N/A N/A N/A N/A
Benefits 2022 59% 5% N/A N/A N/A
2021 3% N/A N/A N/A N/A
2020 2% N/A N/A N/A N/A
Annual incentive 2022 48% 5% N/A N/A N/A
2021 – N/A N/A N/A N/A
2020 32% N/A N/A N/A N/A
1
Robert Lyne was appointed to the Board on 29 April 2021 as interim CEO and was appointed as Chief Executive Officer on 6 October 2021. To enable comparison and to
provide meaningful reflection of the annual percentage change, his fees for the year ended 31 December 2021 have been annualised.
2
Peregrine Moncreiffe, Isaac Kphlberg and Maureen O’Connell were appointed to the Board on 29 April 2021. To enable comparison and to provide meaningful reflection of
the annual percentage change, their fees for the year ended 31 December 2021 have been annualised.
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62 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Relative importance of spend on pay
The table below shows the relative importance of total spend on pay in the 2022 and 2021 financial years compared with
distributions to shareholders. The Company did not pay a dividend in either 2022 or 2021 and only undertook a share
buyback programme in 2021 and not 2022. Underlying operating (loss)/profit is considered the most appropriate metric
given the current stage of the Group.
Total Group spend on remuneration decreased by 30% compared to the previous year:
2022
£’000
2021
£’000 % change
Underlying operating (loss)/profit (29,160) (58,647) (50%)
Dividends/share buybacks – 11,593 N/A
Total Company spend on remuneration 2,482 3,529 (30%)
Total Company spend on remuneration excluding exceptional costs 2,482 3,070 (19%)
Statement of voting on remuneration
The results of the voting on the Directors’ Remuneration Policy and the Annual Report on Remuneration at the AGM held
on 7 June 2022 are set out below:
Votes for
#
Votes for
%
Votes
against
#
Votes
against
%
Votes
withheld
#
To approve the Directors’ Remuneration Policy 63,589,770 99.90% 65,188 0.10% 31,126
To approve the Annual Report on Remuneration 60,232,861 94.62% 3,422,747 5.83% 30,476
Directors’ Remuneration Report continued
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Directors’ Remuneration Policy (summary)
Introduction
The Directors’ Remuneration Policy (“Policy”) was approved by shareholders at the AGM held on 7 June 2022 and applies
for a period of up to three years from the date of approval. A summary of the Policy is set out on the following pages. The
full Policy is included on pages 55 to 63 within the 2021 Annual Report, available in the Investor Relations section of Arix’s
website, www.arixbioscience.com.
Remuneration policy table (executive directors)
Element of
remuneration
How it supports the Company’s
short and long-term strategic
objectives Operation
Opportunity and performance
metrics
Salary Provide salaries that support
the Company to acquire and
retain the highly qualified
Executive Directors who
are needed to develop and
implement the Group’s strategy.
An Executive Director’s basic
salary is set on appointment
and reviewed annually or when
there is a change in position or
responsibility.
When determining an
appropriate level of salary, the
Committee considers:
• individual degree of
responsibility;
• the general operational
performance of the Group
and individual performance (if
applicable);
• the economic environment
and the sustainable
development of the Group;
• remuneration structures
in companies that are
comparable in terms of
business activities, complexity
and size;
• any change in scope, role and
responsibilities; and
• remuneration practices within
the Group.
The Committee ensures that
maximum salary levels are
positioned with consideration
for:
• the need to acquire and retain
Executives with the skills and
experience to develop and
implement the Company’s
strategy;
• companies that are
comparable in terms of
business activities, complexity
and size to Arix, which we
would compete for talent
against.
In general, increases for
Executive Directors will be
in line with the increase for
employees. Increases above
this level may be considered
in certain circumstances such
as where there is a significant
change in responsibility or
where the salary for a new hire
is deliberately set below market
levels with the intention to
implement larger increases in
subsequent years.
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Element of
remuneration
How it supports the Company’s
short and long-term strategic
objectives Operation
Opportunity and performance
metrics
Benefits Provides a benefits package
in line with standard market
practice to enable the Group
to recruit and retain Executive
Directors with the experience
and expertise to deliver the
Group’s strategy.
The Executive Directors are
eligible to receive private health
cover, life assurance, income
protection and a company car
or car allowance.
The Committee recognises
the need to maintain suitable
flexibility in the benefits
provided to ensure it is able
to support the objective of
attracting and retaining
personnel in order to deliver the
Group strategy.
Additional benefits may
therefore be offered, such
as relocation allowances on
recruitment and reasonable tax
advice and filing support.
The maximum will be set at the
cost of providing the benefits
described.
Pensions Provides a pension provision
in line with standard market
practice to enable the Company
to recruit and retain Executive
Directors with the experience
and expertise to deliver the
Group’s strategy.
The Group contributes to
defined contribution (DC)
pensions schemes for UK
employees and US employees
contribute into the Arix 401(k)
pension scheme (which is
open to all employees) with
a contribution made by Arix
alongside an employee’s
contribution. An equivalent cash
allowance may be paid where
appropriate.
The maximum contribution
will be in line with the rates
available to the workforce in
the Executive Director’s local
jurisdiction. The maximum
contribution for UK employees is
currently 7.5% of salary.
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Element of
remuneration
How it supports the Company’s
short and long-term strategic
objectives Operation
Opportunity and performance
metrics
Annual bonus The bonus plan provides an
incentive to the Executive
Directors linked to achievement
in delivering goals that are
closely aligned with the
Company’s strategy and
the creation of value for
shareholders.
The plan supports the
Company’s objectives, allowing
the setting of annual targets
based on the business strategy
at the time, meaning that a
wider range of performance
metrics can be used that are
relevant and achievable.
The Committee will normally
determine the bonus to be
delivered following the end
of the relevant financial year,
taking into account all relevant
factors including performance
against any targets set and the
underlying performance of the
business.
The Committee retains
the discretion to adjust the
formulaic outcome if considered
appropriate in the context of
overall company and individual
performance.
The Committee can require
part of any bonus (up to 50%
of the maximum bonus earned)
to be deferred on a post-tax
basis and invested into shares.
These shares must be held for a
minimum period, normally, three
years.
The Group will set out in the
Remuneration Report in the
following financial year the
decisions taken around any
requirement to invest in shares.
The bonus plan includes malus
and clawback provisions.
The Remuneration Committee
may adjust and amend awards
in accordance with the relevant
plan rules.
The maximum bonus deliverable
in respect of any financial year
under the plan will not exceed
125% of a participant’s annual
basic salary.
Bonus targets and weightings
are set each year and will take
into account the strategic
priorities of the business at the
time.
Details of the performance
conditions, targets and their
level of satisfaction for the
year being reported on will be
set out in the Annual Report on
Remuneration.
Percentage of bonus
maximum earned for levels of
performance (with straight line
pay-outs between these points):
Threshold: 0%
On target: 50%
Maximum: 100%
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Element of
remuneration
How it supports the Company’s
short and long-term strategic
objectives Operation
Opportunity and performance
metrics
Long-Term
Incentive Plan
(“EIP”)
The purpose of the EIP is
to incentivise and reward
Executive Directors in relation
to long-term performance and
achievement of Group strategy.
This will better align Executive
Directors’ interests with the
long-term interests of the
Group and will also act as a
retention mechanism.
The award is designed to
incentivise Executive Directors
to grow the investment
portfolio and value creation
by successfully delivering the
Group’s strategy.
Awards are granted annually to
Executive Directors in the form
of a conditional share award
or nil cost option. Awards are
normally subject to a three-year
performance period, with a
subsequent two-year holding
period.
Performance targets are
normally set annually for
each three-year cycle by the
Remuneration Committee.
The Committee retains
the discretion to adjust
the formulaic outcome, if
considered appropriate, taking
into account all relevant
factors including the underlying
performance of the business.
The Committee may award
dividend equivalents on awards
in either shares or cash to the
extent that these vest.
The Remuneration Committee
may adjust and amend awards
in accordance with the EIP rules.
Awards are subject to malus
and clawback.
Normal maximum value of
225% of salary in respect of
any financial year, based on the
market value at the date of
grant set in accordance with the
rules of the Plan.
In exceptional circumstances
the Committee may grant an
award with a maximum of
300% of salary.
The amount payable for
threshold performance is up to
25% of maximum of the award.
EIP awards will be subject to
the achievement of challenging
performance conditions set by
the Remuneration Committee
prior to each grant linked to the
achievement of the Company’s
long-term strategic priorities
and the creation of long-term
shareholder value.
The Remuneration Committee
retains discretion to change
performance measures and
targets and the weightings
attached to performance
measures part way through a
performance period if there is a
significant and material event
which causes the Remuneration
Committee to believe the
original measures, weightings
and targets are no longer
appropriate. Any changes made
and the circumstances for such
a change will be clearly disclosed
to shareholders in the Annual
Report on Remuneration.
Directors’ Remuneration Report continued
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67ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Strategic reportCorporate governanceFinancial statementsOther information
Element of
remuneration
How it supports the Company’s
short and long-term strategic
objectives Operation
Opportunity and performance
metrics
Minimum
shareholding
requirement
The Committee has adopted formal shareholding guidelines that will encourage the Executive
Directors to build up and then subsequently hold a shareholding equivalent to a percentage of base
salary. Adherence to these guidelines is a condition of continued participation in the equity incentive
arrangements. This policy ensures that the interests of Executive Directors and those of shareholders
are closely aligned.
The Committee will determine the relevant shareholding guideline on an annual basis.
Post-cessation of employment, Executive Directors are also expected to remain aligned with
the interests of shareholders for an extended period after leaving the Company, other than in
exceptional circumstances. Details of the application of this policy are set out in the Annual Report on
Remuneration.
Non-Executive
Director fees
Provide a level of fees to
support recruitment and
retention of high-calibre
Non-Executive Directors with
the necessary experience
to advise and assist with
establishing and monitoring the
Group’s strategic objectives.
The Board as a whole is
responsible for setting the
remuneration of the Non-
Executive Directors. Non-
Executive Directors are paid an
annual fee and additional fees
for additional responsibilities,
such as chairmanship and
membership of committees
or being appointed the
Senior Independent Director.
Additional fees may be paid
for other responsibilities or
time commitments (including
committee membership or for
substantial additional time
requirements above those
expected for the role).
The Board is responsible
for setting the pay of the
Chairman. The Chairman
receives an all-inclusive fee.
Fees are normally paid in cash.
In general, the level of fee
increase for the Non-Executive
Directors will be set taking
account of any change in
responsibility and workload.
Non-Executive Directors
(including a Non-Executive
Chairman) are not eligible to
participate in any incentive
arrangements.
The Chairman and Non-
Executive Directors may be
eligible for benefits such as
use of secretarial support or
other benefits which may be
appropriate for performing
their duties including travel
allowances, if considered
appropriate.
The Company will pay
reasonable business-related
expenses incurred by the
Non-Executive Directors and
may settle any tax incurred in
relation to these.
Directors’ Remuneration Report continued
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68 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Directors’ Remuneration Report continued
Service agreements and letters of appointment
The Executive Director’s service agreement is on a rolling term basis. The details of the Executive Director’s term is set out
below:
Name Date of appointment
Notice periods by
Company (months)
Notice periods by
Director (months)
Robert Lyne 29 April 2021 12 6
The Non-Executive Directors of the Company do not have service contracts but are appointed by letters of appointment.
Each Non-Executive Director’s term of office runs for an initial term of up to and including the next AGM after their
appointment unless terminated earlier upon written notice or upon their resignations. The terms of the Non-Executive
Directors’ appointments are subject to their re-election by the Company’s shareholders at the 2022 AGM and to re-
election at any subsequent AGM at which the Non-Executive Directors stand for re-election. The details of each Non-
Executive Director’s term are set out below:
Name Date of appointment
Current term
(full years)
Notice periods
by Company
(months)
Notice periods
by Director
(months)
Peregrine Moncreiffe 29 April 2021 1 3 3
Isaac Kohlberg 29 April 2021 1 3 3
Maureen O’Connell 29 April 2021 1 3 3
Debra Barker 10 August 2022 0 3 3
Andrew Smith 10 August 2022 0 3 3
Benny Soffer 10 August 2022 0 3 3
The Directors present their report for the year ended 31 December 2022. Additional information which is incorporated by
reference into this Directors’ Report, including information required in accordance with the Companies Act 2006, can be
found as follows:
Disclosure Location
Important events affecting the Company since the year-
end, likely future business developments and research and
development activities
• Strategic Report pages 1 to 36
Financial risk management objectives and policies (including
hedging policy and use of financial instruments)
• Notes to the financial statements pages • to •
Going concern • Strategic Report page 31
Statement of Directors’ responsibilities • Page 72
Diversity Policy • Report of the Nomination Committee page 45
Details of long-term incentive schemes • Note 19 to the financial statements pages 100 to
101
Significant Interests • Directors’ Report page 71
Waiver of emoluments by a Director • Directors’ Remuneration Report pages • to •
Compensation for loss of office arrangements • Directors’ Remuneration Report pages 52 to 59
For the purposes of LR 9.8.4CR, the information required to be disclosed by LR 9.8.4R can be found in the following
locations:
Disclosure Location
Interest capitalised Not applicable
Publication of unaudited financial information Not applicable
Details of long-term incentive schemes • Directors’ Remuneration Report pages 58 to 59
Waiver of emoluments by a Director • Directors’ Remuneration Report pages • to •
Waiver of future emoluments by a Director • Directors’ Remuneration Report pages • to •
Non pre-emptive issues of equity for cash Not applicable
Non pre-emptive issues of equity for cash in relation to major
subsidiary undertakings
Not applicable
Parent participation in a placing by a listed subsidiary Not applicable
Contract of significance in which a Director is interested Not applicable
Contract of significance with a controlling shareholder Not applicable
Provision of services by a controlling shareholder Not applicable
Shareholder waiver of dividends Not applicable
Shareholder waiver of future dividends Not applicable
Agreements with controlling shareholder Not applicable
Compensation for loss of office arrangements • Directors’ Remuneration Report pages 52 to 59
The Strategic Report on pages 1 to 36 and this Directors’ Report have been drawn up and presented in accordance with,
and in reliance upon, applicable English company law and any liability of the Directors in connection with these reports shall
be subject to the limitations and restrictions provided by such law.
Director’s Report
For the year ended 31 December 2022
69ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Director’s Report continued
Directors
The Directors of the Company who held office during the
year are:
Peregrine Moncreiffe
Appointed 29 April 2021
Sir Michael Bunbury
Appointed 6 October 2021
Resigned 9 August 2022
Isaac Kohlberg
Appointed 29 April 2021
Robert Lyne
Appointed 29 April 2021
Maureen O’Connell
Appointed 29 April 2021
Dr Debra Barker
Appointed 10 August 2022
Dr. Benny Soffer
Appointed 10 August 2022
Resigned 31 January 2023
Andrew Smith
Appointed 10 August 2022
Results and dividend
The results for the year ended 31 December 2022 are set
out in the Consolidated Statement of Comprehensive
Income on page 80.
The Board is not recommending a dividend for the year
ended 31 December 2022.
Articles of Association
The rules governing the appointment and replacement
of Directors are set out in the Company’s Articles of
Association. The Articles of Association may be amended
by a special resolution of the Company’s shareholders.
Share capital
Details of the Company’s share issued capital, including
changes during the year, are set out in Note • to the
financial statements. As at 31 December 2022, the
Company’s share capital consisted of:
• 135,609,653 Ordinary Shares of £0.00001 each of which
6,428,853 are held in Treasury; and
• 49,671 C Shares of £1.00 each.
Ordinary shareholders are entitled to receive notice of,
and to attend and speak at, any general meeting of the
Company.
On a show of hands every shareholder present in person
or by proxy (or being a corporation represented by a duly
authorised representative) shall have one vote, and on
a poll every shareholder who is present in person or by
proxy shall have one vote for every share they hold. The
Notice of Annual General Meeting specifies deadlines for
exercising voting rights and appointing a proxy or proxies.
Ordinary Shares held as Restricted Shares pursuant to
the Restrictive Share Agreement are disenfranchised and,
accordingly, holders of such Restricted Shares are not
entitled to vote, attend the meetings of the Company or
receive dividends or other distributions made or paid on the
Ordinary Share capital of the Company.
No voting rights attach to the C Shares and their holders
are not entitled to receive notice of, or to attend and
speak at, any general meeting of the Company. Holders
of C Shares are not entitled to receive any dividend or
distributions made or paid on the Ordinary Share capital of
the Company.
Other than the general provisions of the Articles of
Association (and prevailing legislation), there are no specific
restrictions of the size of a holding or on the transfer of any
class of shares in the Company except as follows:
• Prior consent of the Directors is required for the transfer
of C Shares.
• Holders of Restricted Shares may not dispose of
Restricted Shares until and unless the relevant Restricted
Shares are released from their respective undertakings
pursuant to the Restrictive Share Agreement.
Other than as set out above, the Directors are not aware of
any other agreements between holders of the Company’s
shares that may result in the restriction of the transfer
of securities or on voting rights. No shareholder holds
securities carrying any special rights or control over the
Company’s share capital.
Authority for the Company to purchase its own shares
Subject to authorisation by shareholder resolution, the
Company may purchase its own shares in accordance with
the Act. Any shares which have been bought back may
be held as treasury shares or cancelled immediately upon
completion of the purchase.
At the AGM on 7 June 2022, the Company was generally
and unconditionally authorised by its shareholders to make
market purchases (within the meaning of section 693 of the
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Strategic reportCorporate governanceFinancial statementsOther information
Companies Act 2006) of up to a maximum of 12,918,080 of
its Ordinary Shares. The Company repurchased 6,428,853
of its Ordinary Shares under this authority before the
programme was suspended on 18 October 2021 . The
authority is due to expire on the earlier of the date of this
year’s AGM or 30 June 2023.
Directors’ interests
The number of Ordinary Shares of the Company in which
the Directors were beneficially interested at 31 December
2022, is set out in the Directors’ Remuneration Report on
page 60.
Directors’ indemnities
The Company’s Articles of Association (the “Articles”)
provide, subject to the provisions of UK legislation, an
indemnity for Directors and officers of the Company and
the Group in respect of liabilities they may incur in the
discharge of their duties or in the exercise of their powers.
The Company has made qualifying third party indemnity
provisions for the benefit of its Directors during the period
and these remain in force at the date of this report.
The Company maintains Directors’ and Officers’ liability
insurance cover and this is in place for all the Company’s
Directors at the date of this report. The Company will
review its level of cover annually.
Overseas offices
Arix Bioscience, Inc. has an office in New York, USA.
Political donations
The Group did not make any political donations during
the year.
Change of control – significant agreements
There are a number of agreements that may take effect,
alter or terminate on a change of control of the Company,
such as commercial contracts and property lease
agreements.
None of these are considered to be significant in their likely
impact on the business as a whole.
Audit information
Each Director has taken all the steps that they ought to
have taken as a director in order to make themselves aware
of any relevant audit information and to establish that the
company’s auditors are aware of that information. The
auditors have been provided with:
• access to all information of which the Directors are
aware that is relevant to the preparation of the financial
statements such as records, documentation and other
matters;
• additional information that has been requested for the
purpose of the audit; and
• unrestricted access to persons within the Group from
whom it was determined necessary to obtain audit
evidence.
Significant interests
The table below shows the interests in shares notified to
the Company in accordance with the Disclosure Guidance
and Transparency Rules:
As at 5 April 2023 As at 31 December 2022
Name of Shareholder
Number of
Ordinary
Shares of 0.001
pence each held
Percentage
of total
voting rights
held
Number of
Ordinary
Shares of 0.001
pence each held
Percentage
of total
voting rights
held
Acacia Research Corporation 33,023,210 25.6 27,182,317 20.05%
Fosun International 11,309,849 8.7 11,189,403 8.25%
Christopher Chipperton
(including restricted shares)
6,862,889 5.3 6,862,889 5.06%
Ruffer 6,815,000 5.3 9,163,000 6.76%
Ipsen 6,666,666 5.2 6,666,666 4.92%
Hargreaves Lansdown, stockbrokers (EO) 5,678,780 4.4 5,718,958 4.07%
UCB 5,647,679 4.4 5,647,679 4.17%
Polygon Investment Partners 4,500,000 3.5 5,511,258 3.32%
Director’s Report continued
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72 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Director’s Report continued
So far as each Director is aware, there is no relevant audit
information of which the auditors are unaware.
The confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
Independent auditors
BDO LLP have indicated their willingness to continue in
office and a resolution seeking to reappoint them will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting will be held on Tuesday 23 May
2023 at 13.00 BST at the offices of Brown Rudnick LLP,
8 Clifford Street, London W1S 2LQ. Further details can be
found in the Notice of Annual General meeting which will be
published shortly.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the annual
report and the financial statements in accordance with UK
adopted international accounting standards and applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the group financial
statements and have elected to prepare the company
financial statements in accordance with UK adopted
international accounting standards. Under company law
the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the group and company and of the
profit or loss for the group for that period.
In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance
with UK adopted international accounting standards,
subject to any material departures disclosed and
explained in the financial statements;
• prepare the financial statements on the going concern
basis, unless it is inappropriate to presume that the group
and the company will continue in business; and
• prepare a directors’ report, a strategic report and
directors’ remuneration report which comply with the
requirements of the Companies Act 2006.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the Companies Act 2006.
They are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities. The Directors are responsible for ensuring
that the annual report and accounts, taken as a whole,
are fair, balanced, and understandable and provides the
information necessary for shareholders to assess the
group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and
integrity of the company’s website is the responsibility of
the directors. The directors’ responsibility also extends to
the ongoing integrity of the financial statements contained
therein.
Directors’ responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
The financial statements have been prepared in accordance
with the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position and
profit and loss of the group.
The annual report includes a fair review of the development
and performance of the business and the financial position
of the group and company, together with a description of
the principal risks and uncertainties that they face.
By order of the Board
Kin Company Secretarial Limited
Company Secretary
24 April 2023
73ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the Parent Company’s affairs
as at 31 December 2022 and of the Group’s loss for the
year then ended;
• the Group financial statements have been properly
prepared in accordance with UK adopted international
accounting standards;
• the Parent Company financial statements have been
properly prepared in accordance with UK adopted
international accounting standards and as applied in
accordance with the provisions of the Companies Act
2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
We have audited the financial statements of Arix
Bioscience plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2022 which
comprise the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position,
the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows, the Company
Statement of Financial Position, the Company Statement
of Changes in Equity and notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and UK adopted international
accounting standards and as regards the Parent Company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit committee,
we were appointed by the board in May 2020 to audit the
financial statements for the year ending 31 December
2020 and subsequent financial periods. The period of
total uninterrupted engagement including retenders and
reappointments is 3 years, covering the years ending
2020 to 2022. We remain independent of the Group
and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard
as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services prohibited by
that standard were not provided to the Group or the Parent
Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. Our evaluation of the Directors’ assessment of
the Group and the Parent Company’s ability to continue to
adopt the going concern basis of accounting included:
• Reviewing the latest Board approved forecasts covering 3
years from the year-end date of the financial statements.
• Considering the appropriateness and accuracy of these
forecasts, corroborating the key inputs such as cash
inflows to our knowledge of the entity and evidence
obtained from our work on other areas of the financial
statements, as well as reviewing the Board’s stress test to
ascertain the likelihood of the Group and Parent Company
not having the ability to meet their obligations as they fall
due.
• Challenging the Board about the implications of the
ongoing conflict in Ukraine, current economic climate and
inflation on the business.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least
twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Independent Auditors’ report
to the members of Arix Bioscience plc
Other information Strategic reportCorporate governanceFinancial statements
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Independent Auditors’ report continued
Overview
Coverage 100% (2021: 100%) of Group revenue
100% (2021: 100%) of Group investments
Key audit matters 2022 2021
Valuation of Unquoted Investments Yes Yes
Materiality Group financial statements as a whole
£3.5m (2021: £3.8m) based on 1.5% (2021: 1.5%) of net
assets.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of
material misstatement in the financial statements. We
also addressed the risk of management override of internal
controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of
material misstatement.
We identified six components in the Group, three of which
are significant, five operate in the United Kingdom (‘UK’)
and one in the United States (‘US’). All five UK components
were subject to full scope audits by the Group Engagement
Team to our component materiality. The material balances
and transactions of the US component were audited to our
component materiality by the Group Engagement Team for
group purposes.
Climate change
Our work on the assessment of potential impacts on
climate-related risks on the Group’s operations and
financial statements included:
• Enquiries and challenge of management to understand
the actions they have taken to identify climate-related
risks and their potential impacts on the financial
statements and adequately disclose climate-related risks
within the annual report;
• Our own qualitative risk assessment taking into
consideration the sector in which the Group operates and
how climate change affects this particular sector; and
• Review of the minutes of Board and Audit Committee
meeting and other papers related to climate change and
performed a risk assessment as to how the impact of the
Group’s commitment as set out in Note 21 may affect
the financial statements and our audit.
We challenged the extent to which climate-related
considerations, including the expected cash flows from the
initiatives and commitments have been reflected, where
appropriate, in management’s going concern assessment
and viability assessment.
We also assessed the consistency of managements
disclosures included as ‘Other Information’ on page 28 with
the financial statements and with our knowledge obtained
from the audit.
Based on our risk assessment procedures, we did not
identify there to be any Key Audit Matters materially
impacted by climate-related risks and related
commitments.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period
and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we
identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters.
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Other information Strategic reportCorporate governanceFinancial statements
Key audit matter
How the scope of our audit addressed
the key audit matter
Valuation of Unquoted Investments
Refer to page 89 (accounting policies)
and page 96 (Note 12).
There is a high level of estimation
uncertainty involved in determining the
valuation of the unquoted investments
in the portfolio.
Investments are also the most
significant balance contributing
to the Net Asset Value (NAV) of
the fund, and therefore may be
subject to management bias. We
therefore determined the valuation of
investments to be a key audit matter.
We tested the valuations of a sample
of unquoted investments.
For all investments in our sample we:
• Considered whether the valuation
methodology chosen was in
accordance with accounting
standards and was the most
appropriate in the circumstances
under the International Private
Equity and Venture Capital (IPEV)
Guidelines;
• Held meetings with management to
understand the recent performance
of the investee companies in the
context of their “milestones”, and
corroborated information obtained
in these meetings to board papers,
management information and
publicly available industry articles,
reports and press releases;
• Where a valuation had been
amended based on the price
of a recent funding round, we
obtained associated Sale Purchase
Agreements for the funding round in
order to corroborate the price of the
round, and considered whether the
funding round had been carried out
on an arm’s length basis;
• Where a valuation had been
amended based on an investee
company achieving or failing to meet
certain key milestones, we challenged
the basis of the change in value
and obtained third party evidence.
We assessed this by enquiries with
management and corroborated
this by inspecting board packs and
financial performance of the investee
companies.
Key observations:
Based on the procedures performed,
we consider the estimates made by
management in valuing the unquoted
investments to be reasonable.
Independent Auditors’ report continued
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Independent Auditors’ report continued
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements Parent Company financial statements
2022
£m
2021
£m
2022
£m
2021
£m
Materiality 3.5 3.8 2.8 2.8
Basis for determining materiality 1.5% net assets 1.5% net assets 1.5% net assets 1.5% net assets
Rationale for the benchmark applied Given the activities of the Group as a
venture capital group and the needs of
the users of the financial statements,
we determined that Net Assets was
the most appropriate benchmark.
The nature of the parent company
as a holding company and therefore
being an asset-based entity.
Performance materiality 2.7 2.8 2.1 2.1
Basis for determining performance
materiality
75% materiality 75% materiality 75% materiality 75% materiality
On the basis of our risk assessment together with our assessment of the
overall control environment and expected total value of known and likely
misstatements, based on past experience, our judgement was that overall
performance materiality for the Group and Parent should be 75% of
materiality.
Component materiality
We set materiality for each component of the Group based
on a percentage of 62% (2021: 49%) of Group materiality
dependent on the size and our assessment of the risk of
material misstatement of that component. Component
materiality ranged from £2.1m (2021: £1.7m) to £2.2m
(2021: £2.8m). In the audit of each component, we further
applied performance materiality levels of 75% (2021: 75%)
of the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report
to them all individual audit differences in excess of £71k
(2021: £76k). We also agreed to report differences below
this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The
other information comprises the information included in
the Annual Report and Accounts other than the financial
statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other
information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read
the other information and, in doing so, consider whether
the other information is materially inconsistent with the
financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required
to determine whether this gives rise to a material
misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
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77ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Other information Strategic reportCorporate governanceFinancial statements
Corporate governance statement
As the Group has voluntarily adopted the UK Corporate Governance Code 2018, we are required to review the Directors’
statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement
relating to the parent company’s compliance with the provisions of the UK Corporate Governance Code specified for our
review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during
the audit.
Going concern and longer-term viability • The Directors' statement with regards to the
appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set
out on page 31; and
• The Directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers and
why the period is appropriate set out on page 31.
Other Code provisions • Directors' statement on fair, balanced and
understandable set out on page 72;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
pages 27 to 31;
• The section of the annual report that describes the
review of effectiveness of risk management and internal
control systems set out on pages 48 to 51; and
• The section describing the work of the audit committee
set out on pages 48 to 51.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the Strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the Strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the
Group and Parent Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’
report.
Independent Auditors’ report continued
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78 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Independent Auditors’ report continued
Directors’ remuneration In our opinion, the part of the Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on which we are required to report
by exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company financial statements and the part
of the Directors’ remuneration report to be audited
are not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including
fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which
it operates;
• Discussion with management and those charged with
governance;
• Obtaining and understanding of the Group’s policies
and procedures regarding compliance with laws and
regulations; and
we considered the significant laws and regulations to
be Companies Act 2006, the FCA listing and DTR rules,
the principles of the UK Corporate Governance Code,
requirements of PAYE and VAT legislation and IFRS.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with
governance for any instances of non-compliance with
laws and regulations;
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79ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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• Review of correspondence with regulatory and tax
authorities for any instances of non-compliance with laws
and regulations;
• Review of financial statement disclosures and agreeing to
supporting documentation;
• Involvement of tax specialists in the audit; and
• Review of legal expenditure accounts to understand the
nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements
to material misstatement, including fraud. Our risk
assessment procedures included:
• Enquiry with management and those charged with
governance regarding any known or suspected instances
of fraud;
• Obtaining an understanding of the Group’s policies and
procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to
fraud.
• Review of minutes of meeting of those charged with
governance for any known or suspected instances of
fraud;
• Discussion amongst the engagement team as to how and
where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual
or unexpected relationships that may indicate risks of
material misstatement due to fraud; and
• Considering remuneration incentive schemes and
performance targets and the related financial statement
areas impacted by these.
Based on our risk assessment, we considered the areas
most susceptible to fraud to be valuation of unquoted
investments and management override of controls.
Our procedures in respect of the above included:
• Testing a sample of journal entries throughout the
year, which met a defined risk criteria, by agreeing to
supporting documentation;
• Assessing significant estimates made by management
for bias in relation to valuation of unquoted investments.
The key audit matters section of our report explains this
matter in more detail and also describes the specific
procedures we performed in response to that key audit
matter; and
• Agreement of the financial statements disclosures to
underlying supporting documentation.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members who were all deemed to have appropriate
competence and capabilities and remained alert to any
indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Parent
Company’s members those matters we are required
to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions
we have formed.
Vanessa-Jayne Bradley (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
Date: 24 April 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Independent Auditors’ report continued
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80 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Note
2022
£’000
2021
£’000
Change in fair value of investments 12 (3 0, 76 8 ) (47 ,975 )
Impairment of investments 12 – (5,943 )
Revenue 3 1 12 340
Administrative expenses 6, 19 (5, 405 ) (5,069 )
Foreign exchange gain/(loss) 6 ,9 0 1 –
Operating loss before exceptional costs (2 9,1 6 0 ) (58,647 )
Exceptional costs 8 – (1,490 )
Operating loss after exceptional costs (2 9,1 6 0 ) (60 ,137 )
Finance income 7 1,581 156
Foreign exchange loss* – (1,369 )
Share-based payment* – 266
Loss before taxation (27 , 5 7 9 ) (61,084 )
Taxation 10 4 –
Loss for the year (27,575 ) (61,084 )
Other comprehensive income
Items that have been/may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (2 ,05 0 ) 91
Taxation 10 – –
Total comprehensive expense for the year (29 ,625 ) (60,993 )
Attributable to
Owners of Arix Bioscience plc (29 ,625 ) (60,993 )
Loss per share
Basic loss per share (p) 11 (2 3 .9 ) (48.0 )
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
* In the current year the foreign exchange gain has been moved to be included within operating expenses and the share-based payment is now included within
Administrative expenses.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
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81ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Other information Strategic reportCorporate governanceFinancial statements
Note
2022
£’000
2021
£’000
ASSETS
Non-current assets
Investments held at fair value 12 102,694 120,635
Intangible assets 13 24 168
Property, plant and equipment 14A 57 85
Right of use asset 14B 72 121
Current assets
Cash and cash equivalents 16 122,782 134,230
Other assets 15 2,218 1,839
TOTAL ASSETS 227 ,847 257 ,0 78
LIABILITIES
Current liabilities
Trade and other payables 17 (1,864 ) (1,600 )
Lease Liability (59 ) –
(1,923 ) (1,600 )
Non-current liabilities
Lease liability (11 ) (121 )
TOTAL LIABILITIES (1,934 ) (1,721 )
NET ASSETS 225,913 255,357
EQUITY
Share capital and share premium 18 188,585 188,585
Retained earnings 51,250 80,694
Other reserves (13,922 ) (13,922 )
TOTAL EQUITY 225,913 255,357
The accompanying notes form an integral part of the financial statements. The financial statements on pages 80 to 83
were approved by the Board of Directors and authorised for issue on 24 April 2023, and were signed on its behalf by
Peregrine Moncreiffe
Chairman
Consolidated statement of financial position
As at 31 December 2022
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82 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Consolidated statement of changes in equity
For the year 31 December 2022
For the year 31 December 2021
Share
Capital and
Premium
£’000
Other
Equity
£’000
Other
Reserves
£’000
Treasury
Share
Reserve
£’000
Retained
Earnings
£’000
Total
£’000
As at 1 January 2022 188, 585 (1 , 2 1 6 ) (1, 113 ) (11 ,593 ) 80 ,694 2 55, 357
Loss for the year – – – – (27,575 ) (27 ,575 )
Other comprehensive income – – – – (2 ,0 5 0 ) (2 ,0 50 )
Share-based payment charge – – – – 181 181
As at 31 December 2022 18 8,585 (1 , 2 1 6 ) (1,113 ) (11,593 ) 51,2 50 2 2 5 ,9 1 3
Share
Capital and
Premium
£’000
Other
Equity
£’000
Other
Reserves
£’000
Treasury
Share
Reserve
£’000
Retained
Earnings
£’000
Total
£’000
As at 1 January 2021 188,585 (1, 24 0 ) (1, 180 ) – 1 42,0 4 4 3 28,20 9
Loss for the year – – – – (6 1 , 0 8 4 ) (61 , 0 8 4 )
Other comprehensive income – – 91 – – 91
Share-based payment credit – – – – (2 6 6 ) (2 6 6 )
Acquisition of own shares – – – (11,593 ) – (11,593 )
Issue of own shares to employees – 24 (2 4 ) – – –
As at 31 December 2021 188,585 (1,216 ) (1, 113 ) (11,593 ) 8 0,694 255, 357
Job No: 49002 Proof Event: 9 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA
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83ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Other information Strategic reportCorporate governanceFinancial statements
Consolidated statement of cash flows
For the year ended 31 December 2022
Note
2022
£’000
2021
£’000
Cash flows from operating activities 20 (6 , 2 2 1 ) (7 ,294 )
Finance income 1, 582 156
Finance expenses (1 ) –
Tax received 4 –
Net cash used in operating activities (4 , 6 3 6 ) (7 ,138 )
Cash flows from investing activities
Purchase of equity investments 12 (33, 623 ) (59 ,221 )
Disposal of equity and loan investments 12 2 0,79 6 39 ,084
Purchase of property, plant and equipment 14A (8 ) (101 )
Cash received from/(placed on) long-term deposit – 62,276
Net cash (used in)/from investing activities (12,83 5 ) 42,038
Cash flows from financing activities
Purchase of own shares – (11,593 )
Principal elements of lease payments (6 3 ) –
Net cash used in financing activities (6 3 ) (11,593 )
Net (decrease)/increase in cash and cash equivalents (1 7, 5 3 4 ) 23,307
Cash and cash equivalents at start of year 134 ,2 30 112 ,085
Effect of exchange rate changes 6,0 86 (1,162 )
Cash and cash equivalents at end of year 122 ,782 134,230
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84 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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86 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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88 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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89ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Other information Strategic reportCorporate governanceFinancial statements
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90 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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92 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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94 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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96 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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98 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Notes to the financial statements continued
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100 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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101ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
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Notes to the financial statements continued
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102 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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104 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Note
2022
£’000
2021
£’000
ASSETS
Non-current assets
Investments in subsidiary undertakings 2 891 891
Amounts due from subsidiary undertakings 4 79,543 57,164
80,434 58,055
Current assets
Cash and cash equivalents 3 112,147 130,232
Trade and other receivables 383 72
112,530 130,304
TOTAL ASSETS 192,964 188,359
LIABILITIES
Current liabilities
Trade and other payables (472) (566)
TOTAL LIABILITIES (472) (566)
NET ASSETS 192,492 187,793
EQUITY
Share capital and share premium 188,585 188,585
Profit/(Loss) for the period 4,518 (3,586)
Retained earnings 13,179 16,584
Other reserves (13,790) (13,790)
TOTAL EQUITY 192,492 187,793
Company statement of financial position
As at 31 December 2022
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105ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Other information Strategic reportCorporate governanceFinancial statements
Company statement of changes in equity
For the year 31 December 2022
For the year 31 December 2021
Share
Capital and
Premium
£’000
Other
Equity
£’000
Other
Reserves
£’000
Treasury
Share
Reserve
£’000
Retained
Earnings
£’000
Total
£’000
As at 1 January 2022 188,585 (1,216) (981) (11,593) 12,998 187,793
Profit for the year – – – – 4,518 4,518
Share-based payment charge – – – – 181 181
As at 31 December 2022 188,585 (1,216) (981) (11,593) 17,697 192,492
Share
Capital and
Premium
£’000
Other
Equity
£’000
Other
Reserves
£’000
Treasury
Share
Reserve
£’000
Retained
Earnings
£’000
Total
£’000
As at 1 January 2021 188,585 (1,240) (957) – 16,850 203,238
Loss for the year – – – – (3,586) (3,586)
Share-based payment credit – – – – (266) (266)
Acquisition of own shares – – – (11,593) – (11,593)
Issue of own shares to employees – 24 (24) – – –
As at 31 December 2021 188,585 (1,216) (981) (11,593) 12,998 187,793
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106 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Notes to the Company financial statements
1. Accounting Policies
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”).
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 and
prepared in accordance with FRS 101. The Company has set out below where advantage of the FRS 101 disclosure
exemptions has been taken.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and
loss account. In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of
the following disclosures:
Statement of Cash Flows and related notes; disclosures in respect of transactions with wholly owned subsidiaries;
disclosures in respect of capital management; the effects of new but not yet effective IFRSs; and disclosures of
transactions with a management entity that provides key management personnel services to the Company.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions
under FRS 101 available in respect of the following disclosures: IFRS 2 Share Based Payments; certain disclosures required
by IFRS 13 Fair Value Measurement; and the disclosures required by IFRS 7 Financial Instrument Disclosures.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
The accounting policies set out below have been applied consistently. Where relevant, the accounting policies of the Arix
Group have been applied to the Company.
Investments in subsidiary undertakings
Unlisted investments are held at cost less any provision for impairment.
Amounts due from subsidiary undertakings
All amounts due from subsidiary undertakings are initially recognised at fair value and subsequently measured at
amortised cost. Amounts provided to subsidiaries are intended for use on a continuing basis in the Company’s activities,
with no intention of their settlement in the foreseeable future; as such, they are presented as non-current fixed assets.
2. Investments in Subsidiary Undertakings
2022
£’000
2021
£’000
Opening balance 891 891
Additions – –
Disposals – –
At 31 December 891 891
The Company’s subsidiary undertakings are detailed in Note 2(B) to the Group financial statements.
3. Cash and Cash Equivalents
As at
31 December
2022
£’000
As at
31 December
2021
£’000
Cash at bank and in hand 112,147 130,232
The carrying value of cash and cash equivalents approximates to its fair value.
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4. Amounts Due from Subsidiary Undertakings
As at
31 December
2022
£’000
As at
31 December
2021
£’000
Opening balance 57,164 29,927
Net additions/(repayments) during the year 22,379 27,237
Impairments during the year – –
At 31 December 79,543 57,164
The amounts due from subsidiary undertakings are interest free and unsecured. Arix Bioscience plc currently has no
intention to request repayment of any amounts due.
5. Employees
The average number of employees during the year was one (2021: 1).
Notes to the Company financial statements continued
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108 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
Shareholder information
Warning about unsolicited approaches to
shareholders and ‘boiler room’ scams
In recent years, many companies have become aware that
their shareholders have received unsolicited phone calls
or correspondence concerning investment matters. These
are typically from overseas-based ‘brokers’ who target UK
shareholders, offering to sell them what often turn out to
be worthless or high risk shares in UK investments. These
operations are commonly known as ‘boiler rooms’.
These ‘brokers’ can be very persistent and persuasive. Arix
Bioscience plc shareholders are advised to be extremely
wary of such approaches and are advised to only deal with
firms authorised by the FCA. You can check whether an
enquirer is properly authorised and report scam approaches
by contacting the FCA on www.fca.org.uk/scams (where
you can also review the latest scams) or by calling the FCA
Consumer Helpline: 0800 111 6768.
If you have already paid money to share fraudsters then
contact Action Fraud on 0300 123 2040.
Registrar
The Company’s register of shareholders is maintained
by our Registrar, Equiniti Limited. All enquiries regarding
shareholder administration, including lost share certificates
or changes of address, should be communicated in writing
or by calling +44 (0)371 384 2030 (lines are open 8.30am
to 5.30pm Mondays to Fridays, excluding Bank Holidays
in England and Wales). Please use the country code when
calling from outside the UK.
Shareholders can also view and manage their shareholdings
online by registering at www.shareview.co.uk.
Forward-looking statements
This Annual Report has been prepared for, and only for,
the members of Arix Bioscience plc (“the Company”) as a
body, and for no other persons. The Company, its Directors,
employees, agents or advisers do not accept or assume
responsibility to any other person to whom this document
is shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed.
By their nature, the statements concerning the risks and
uncertainties facing the Group in this Annual Report
involve uncertainty since future events and circumstances
can cause results and developments to differ materially
from those anticipated. The forward-looking statements
reflect knowledge and information available at the date
of preparation of this Annual Report and the Company
undertakes no obligation to update these forward-looking
statements. Nothing in this Annual Report should be
construed as a profit forecast.
Directors
Peregrine Moncreiffe
Isaac Kohlberg
Robert Lyne
Maureen O’Connell
Debra Barker
Andrew Smith
Company Secretary
Kin Company Secretarial Limited
Hyde Park House
5 Manfred Road
London SW15 2RS
Registered Office
Duke Street House
50 Duke Street
London W1K 6JL
United Kingdom
Company Number
09777975
Advisors
Joint Broker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Joint Broker
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Legal advisers
Brown Rudnick LLP
8 Clifford Street
London W1S 2LQ
United Kingdom
One Financial Center Boston
MA 02111
United States
Independent Auditors
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing BN99 6DA
United Kingdom
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109ANNUAL REPORT 2022 ARIX BIOSCIENCE PLC
Strategic reportFinancial statementsOther information Corporate governance
anti-PD-L1 antibody
Monoclonal antibody directed against programmed cell
death-1 ligand 1 (PD-L1). The antibody binds to PD-L1,
blocking its binding to and activation of its receptor
programmed death 1 (PD-1), the activation of which
normally dampens anticancer immune responses.
ATR inhibitor
A molecule that inhibits ataxia telangiectasia and Rad3
related (ATR) kinase, an enzyme frequently overexpressed
in cancer contributing to cancer cell survival and growth by
contributing towards DNA repair and cell cycle progression.
BCR-ABL
A gene formed due to the fusion of the BCR and ABL genes
from different chromosomes which is often a driver of
certain types of leukaemia.
BLA
Biologics License Application is submitted after an
investigational new drug has been approved. The biologics
license application is a request for permission to introduce,
or deliver for introduction, a biologic product into interstate
commerce.
Core Portfolio
Arix’s core portfolio comprises investments in companies
that are developing novel therapeutics with first or best-
in-class approach in a range of therapeutics areas with
high unmet need and significant market opportunity. These
companies have raised significant capital, supported by
a strong syndicate of leading venture investors, and have
reached validating milestones.
CRISPR-Cas12a
RNA-guided endonuclease which can be used to make
highly specific modifications to DNA or RNA.
Gross Portfolio
Arix’s Core Portfolio, Listed Portfolio and Public
Opportunities Portfolio.
Hematology
The branch of medicine concerned with the study of the
cause, prognosis, treatment, and prevention of diseases
related to blood.
Hematopoietic system
The system in the body that produces blood cells.
HER2
Acronym for human epidermal growth factor receptor 2.
This is a receptor found on the surface of all breast cells and
is involved in the control of cell growth.
Myeloma
A type of blood cancer arising from plasma cells found in
the bone marrow.
Net Asset Value (NAV)
A company’s assets less its liabilities.
Net Asset Value per share
A company’s net asset value divided by the number of
shares in issue.
NSTI
Necrotising Soft Tissue Infections; serious bacterial
infections that cause inflammation and damage to the soft
tissue layers underneath the surface of the skin.
PARP inhibitor
A molecule that inhibits the enzyme poly ADP ribose
polymerase (PARP) which is important in repairing DNA
single-strand breaks.
Phase 1
A clinical study testing a therapy in humans (healthy
volunteers or in some cases in patients) for the first time to
establish the safety of a range of doses.
Phase 2
A clinical study testing a therapy in patients to establish
the safety and efficacy of one or more doses. Intended to
provide ‘Proof of Concept’ and to influence design of one or
more Phase 3 studies.
Phase 3
A clinical study testing a therapy in a larger group of
patients (vs. Phase 2) to establish efficacy and safety with
statistical significance in order to support registration and
approval by a regulatory agency (e.g. FDA, EMA).
Preclinical
Testing of drug in non-human subjects, to gather efficacy,
toxicity and pharmacokinetic information.
Pol0 inhibitor
A molecule that inhibits DNA polymerase theta (Pol0)
which is a DNA repair enzyme. Pol0 has limited expression
in normal tissues but is frequently over expressed in cancer
cells.
Public Opportunities Portfolio
Arix taking advantage of low public valuations in publicly
listed clinical-stage biotech companies, focusing on de-
risked opportunities that are well funded, trading at
negative enterprise value or close to an equivalent of cash
reserves, with expected clinical milestones over the next 6
to 18 months.
SCD
Sickle Cell Disease – an inherited health condition that
affects the red blood cells.
Solid Tumour
A cancer comprising solid tissue (i.e. not a blood cancer).
TriTAC
Tri-specific T cell Activating Construct – Harpoon’s
approach for targeted penetration and destruction of solid
tumours and haematologic malignancies.
Glossary
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110 ARIX BIOSCIENCE PLC ANNUAL REPORT 2022
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Duke Street House
50 Duke Street
London W1K 6JL
United Kingdom
+44 (0)20 7290 1050
info@arixbioscience.com
Annual report and accounts 2022