UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of February 2022
Commission File Number: 001-40106
4D pharma plc
(Translation of Registrant’s name into English)
5th Floor, 9 Bond Court
Leeds
LS1 2JZ
United Kingdom
Tel: +44 (0) 113 895 013
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
On February 18, 2022, 4d pharma plc (the “Company,” “4D,” “4D pharma,” “we,” “us” or “our”) issued a press release entitled “4D pharma to Restate Unaudited Interim Financial Statements for the Six-Month Period Ended June 30, 2021 to Correct Accounting for Warrants.”
A copy of the press release is attached as Exhibit 99.1 to this current report on Form 6-K and is incorporated by reference herein.
INDEX TO EXHIBITS
| Exhibit | ||
| Number | Exhibit Title | |
| 99.1 | Press Release, dated February 18, 2022. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 4D pharma plc | ||
| Date: February 18, 2022 | /s/ Duncan Peyton | |
| Duncan Peyton | ||
| Chief Executive Officer |
Exhibit 99.1
4D pharma to Restate Unaudited Interim Financial Statements for the
Six-Month Period Ended June 30, 2021 to Correct Accounting for
Warrants
Non-cash adjustment with no effect on cash position or operating results of 4D Pharma’s business
Audited financial statements for Fiscal Year 2020 are not affected
Leeds, UK, February 18, 2022 – 4D pharma plc (AIM: DDDD, NASDAQ: LBPS), a pharmaceutical Company leading the development of Live Biotherapeutic products (LBPs), a novel class of drug derived from the microbiome, today announced that the Company has determined that the warrants and units assumed by the Company in connection with its March 2021 merger with Longevity Acquisition Corporation should not be recorded as equity instruments, and in accordance with IFRS and US GAAP, should be recorded as derivative liabilities. While the issues identified are non-cash, and do not impact the cash and cash equivalents, the Company has restated the unaudited interim consolidated financial statements for the six months period ending June 30, 2021.
The issues disclosed in this release are an accounting technicality and were identified during the Company’s ongoing preparation of its audited financial statements for the year ended December 31, 2021. The restatements do not impact the Company’s cash and cash equivalents, revenues, operating expenses, operating loss, assets, or liquidity for the affected period.
This restatement will apply to the Company’s International Financial Reporting Standards “IFRS” and US Generally Accepted Accounting Principles “GAAP” financial statements for the six months period ending June 30, 2021.The Company’s audited financial statements for the year ended December 31, 2020 are not affected.
IFRS Statements
As previously reported under IFRS, the Company had concluded that the warrants and units were determined to be equity instruments and accounted for under IFRS 2. During the re-assessment and in line with the IFRIC discussion paper dated February 1, 2022 (‘Special purpose acquisition companies (SPAC); accounting for warrants at acquisition’), the Company has reviewed its warrant accounting policies and determined that the rules outlined in IAS 32 may provide a more appropriate treatment than that of IFRS 2. IAS 32 states that equity linked financial instruments must meet a “fixed for fixed” criteria to be accounted for as equity based. As a result of the variation in the strike price currency (USD$) and the Company’s functional currency (GBP£) together with the cashless exercise features, the warrants and units are to be determined as liabilities. Therefore, the Company has decided to reassess its accounting policy, changing the reporting of the warrants and units to liabilities in its restated financials. The restated IFRS financial statements are set out below. The effect on IFRS reporting are as follows:
| ● | Income Statement: Restated comprehensive loss of (£49.2) million compared to (£56.1) million as previously reported. This is a reduction in comprehensive loss of £6.9 million due to the change in fair value of the warrants as of June 30, 2021 | |
| ● | Balance Sheet: Reduction in equity and net assets of £11.5 million, offset by an increase in liabilities of £11.5 million |
GAAP Statements
As previously reported under GAAP, the Company had concluded that the warrants and units were indexed to its own stock and were equity based. According to Accounting Standards Codification “ASC” 815-40-15-71, equity linked financial instruments issued with a strike price denominated in a currency (USD$) different than the Company’s functional currency (GBP£) incurs an exposure to changes in currency exchange rates and thus cannot be indexed to the Company’s stock. Therefore, the Company has corrected this issue and will report the warrants and units as derivative liabilities in the Form 6-K to be furnished with the US Securities and Exchange Commission. The effect on GAAP reporting are as follows:
| ● | Income Statement: Restated comprehensive loss of ($24.2) million compared to ($18.5) million as previously reported. This is an increase in comprehensive loss of $5.8 million, due to $11.0 million loss on issuance of securities, partially offset by $5.2 million in the change in fair value of the warrants as of June 30, 2021 | |
| ● | Balance Sheet: Reduction of $5.8 million in stockholder’s equity, offset by an increase in liabilities of $5.8 million |
About 4D pharma
4D pharma is a world leader in the development of Live Biotherapeutics, a novel and emerging class of drugs, defined by the FDA as biological products that contain a live organism, such as a bacterium, that is applicable to the prevention, treatment or cure of a disease. 4D pharma has developed a proprietary platform, MicroRx®, that rationally identifies Live Biotherapeutics based on a deep understanding of function and mechanism.
4D pharma’s Live Biotherapeutic products (LBPs) are orally delivered single strains of bacteria that are naturally found in the healthy human gut. The Company has five clinical programs, namely a Phase I/II study of MRx0518 in combination with KEYTRUDA® (pembrolizumab) in solid tumors, a Phase I study of MRx0518 in a neoadjuvant setting for patients with solid tumors, a Phase I study of MRx0518 in patients with pancreatic cancer, a Phase I/II study of MRx-4DP0004 in asthma, and Blautix® in irritable bowel syndrome (IBS) which has completed a successful Phase II trial. Preclinical-stage programs include candidates for CNS disease such as Parkinson’s disease and other neurodegenerative conditions. The Company has a research collaboration with MSD, a tradename of Merck & Co., Inc., Kenilworth, NJ, USA, to discover and develop Live Biotherapeutics for vaccines.
For more information, refer to https://www.4dpharmaplc.com.
Contact Information:
4D
Duncan Peyton, Chief Executive Officer +44 (0)113 895 0130
Investor Relations ir@4dpharmaplc.com
Singer Capital Markets – Nominated Adviser and Joint Broker +44 (0)20 7496 3000
Philip Davies / James Fischer (Corporate Finance)
Tom Salvesen (Corporate Broking)
Bryan Garnier & Co. Limited - Joint Broker +44 (0)20 7332 2500
Dominic Wilson
Stern Investor Relations
Julie Seidel +1-212-362-1200
Julie.seidel@sternir.com
IFRS Group Statement of Total Comprehensive Income
For the six months to 30 June 2021 (restated)
| Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2020 | Audited Year to 31 December 2020 | ||||||||||||||||
| Reported | Adjustment | Restated | Reported | Reported | ||||||||||||||||
| £000 | £000 | £000 | £000 | £000 | ||||||||||||||||
| Revenue | 231 | — | 231 | 275 | 534 | |||||||||||||||
| Research and development costs | (9,873 | ) | — | (9,873 | ) | (12,418 | ) | (22,041 | ) | |||||||||||
| Administrative expenses | (3,346 | ) | — | (3,346 | ) | (3,839 | ) | (5,969 | ) | |||||||||||
| Foreign currency gains | 229 | — | (229 | ) | 920 | 363 | ||||||||||||||
| Other operating income | 18 | — | (18 | ) | 21 | 45 | ||||||||||||||
| Operating loss before non-recurring costs | (12,741 | ) | — | (12,741 | ) | (15,041 | ) | (27,068 | ) | |||||||||||
| Non-recurring costs | (44,160 | ) | — | (44,160 | ) | (565 | ) | (3,110 | ) | |||||||||||
| Operating loss after non-recuring costs | (56,901 | ) | — | (56,901 | ) | (15,606 | ) | (30,178 | ) | |||||||||||
| Finance income | ||||||||||||||||||||
| – Fair value adjustment of warrants and units | — | 6,927 | 6,927 | — | — | |||||||||||||||
| – Other | 2 | — | 2 | 5 | 5 | |||||||||||||||
| Finance expense | (83 | ) | — | (83 | ) | (88 | ) | (173 | ) | |||||||||||
| Loss before taxation | (56,982 | ) | 6,927 | (50,055 | ) | (15,689 | ) | (30,346 | ) | |||||||||||
| Taxation | 1,532 | — | 1,532 | 1,963 | 4,383 | |||||||||||||||
| Loss for the period | (55,450 | ) | 6,927 | (48,523 | ) | (13,726 | ) | (25,963 | ) | |||||||||||
| Other comprehensive income: | ||||||||||||||||||||
| Exchange differences on translating foreign operations | (665 | ) | — | (665 | ) | 165 | 110 | |||||||||||||
| Loss and total comprehensive income for the period | (56,115 | ) | 6,927 | (49,188 | ) | (13,561 | ) | (25,853 | ) | |||||||||||
| Loss per share | ||||||||||||||||||||
| Basic and diluted for the period | (34.97 | )p | 4.37 | p | (30.60 | )p | (14.06 | )p | (22.80 | )p | ||||||||||
IFRS Group Statement of Financial Position
At 30 June 2021 (restated)
| At 30 June 2021 | At 30 June 2021 | At 30 June 2021 | At 30 June 2020 | At 31 December 2020 | ||||||||||||||||
| Reported | Adjustment | Restated | Reported | Reported | ||||||||||||||||
| £000 | £000 | £000 | £000 | £000 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Non-current assets | ||||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||
| – Owned assets | 3,229 | — | 3,229 | 4,150 | 3,659 | |||||||||||||||
| – Right-of-use assets | 752 | — | 752 | 911 | 835 | |||||||||||||||
| Intangible assets | 13,780 | — | 13,780 | 14,181 | 14,025 | |||||||||||||||
| Taxation receivables | 180 | — | 180 | 191 | 177 | |||||||||||||||
| 17,941 | — | 17,941 | 19,433 | 18,696 | ||||||||||||||||
| Current assets | ||||||||||||||||||||
| Inventories | 305 | — | 305 | 212 | 291 | |||||||||||||||
| Trade and other receivables | 2,980 | — | 2,980 | 2,046 | 3,223 | |||||||||||||||
| Taxation receivables | 5,675 | — | 5,675 | 8,228 | 4,436 | |||||||||||||||
| Cash and cash equivalents | 20,746 | — | 20,746 | 20,746 | 8,775 | |||||||||||||||
| 29,706 | — | 29,706 | 20,513 | 16,725 | ||||||||||||||||
| Total assets | 47,647 | — | 47,647 | 39,946 | 35,421 | |||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Trade and other payables | 6,962 | — | 6,962 | 6,423 | 6,379 | |||||||||||||||
| Lease liabilities | 74 | — | 74 | 73 | 73 | |||||||||||||||
| 7,036 | — | 7,036 | 6,496 | 6,452 | ||||||||||||||||
| Non-current liabilities | ||||||||||||||||||||
| Lease liabilities | 936 | — | 936 | 1,027 | 986 | |||||||||||||||
| Liabilities on warrants and units | — | 11,503 | 11,503 | — | — | |||||||||||||||
| Deferred tax | 12 | — | 12 | 966 | 13 | |||||||||||||||
| 948 | 11,503 | 12,451 | 1,993 | 999 | ||||||||||||||||
| Total liabilities | 7,984 | 11,503 | 19,487 | 8,489 | 7,451 | |||||||||||||||
| Net assets | 39,663 | (11,503 | ) | 28,160 | 31,457 | 27,970 | ||||||||||||||
| Capital and reserves | ||||||||||||||||||||
| Share capital | 451 | — | 451 | 274 | 329 | |||||||||||||||
| Share premium | 159,937 | 25,734 | 185,671 | 130,186 | 136,278 | |||||||||||||||
| Merger reserve | 958 | — | 958 | 958 | 958 | |||||||||||||||
| Translation reserve | (110 | ) | — | (110 | ) | 611 | 555 | |||||||||||||
| Other reserve | (864 | ) | — | (864 | ) | (864 | ) | (864 | ) | |||||||||||
| Share-based payment reserve | 47,488 | (44,164 | ) | 3,324 | 1,010 | 3,497 | ||||||||||||||
| Retained earnings | (168,197 | ) | 6,927 | (161,270 | ) | (100,718 | ) | (112,783 | ) | |||||||||||
| Total equity | 39,663 | (11,503 | ) | 28,160 | 31,457 | 27,970 | ||||||||||||||
IFRS Group Cash Flow Statement
For the six months to 30 June 2021 (restated)
| Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2021 | Unaudited six months ended 30 June 2020 | Audited Year to 31 December 2020 | ||||||||||||||||
| Reported | Adjustment | Restated | Reported | Reported | ||||||||||||||||
| £000 | £000 | £000 | £000 | £000 | ||||||||||||||||
| Loss after taxation | (55,450 | ) | 6,927 | (48,523 | ) | (13,726 | ) | (25,963 | ) | |||||||||||
| Adjustments for: | ||||||||||||||||||||
| Depreciation of property, plant and equipment | 446 | — | 446 | 508 | 1,003 | |||||||||||||||
| Amortization of intangible assets | 74 | — | 74 | 110 | 203 | |||||||||||||||
| Loss on disposal of property, plant and equipment | 40 | — | 40 | — | — | |||||||||||||||
| Lease liabilities included in the Income Statement | — | — | — | 68 | 135 | |||||||||||||||
| Finance income | ||||||||||||||||||||
| - Other | (2 | ) | — | (2 | ) | (5 | ) | (5 | ) | |||||||||||
| - Fair value adjustment of warrants and units | — | (6,927 | ) | (6,927 | ) | — | — | |||||||||||||
| Finance expense | 83 | — | 83 | 88 | 173 | |||||||||||||||
| Expense on issue of shares | — | — | — | 1,498 | — | |||||||||||||||
| Share based compensation | 44,121 | — | 44,121 | 675 | 3,334 | |||||||||||||||
| Cash flows from operations before movements in working capital | (10,688 | ) | — | (10,688 | ) | (10,784 | ) | (21,120 | ) | |||||||||||
| Changes in working capital: | ||||||||||||||||||||
| Increase in inventories | (14 | ) | — | (14 | ) | (14 | ) | (93 | ) | |||||||||||
| Decrease/(increase) in trade and other receivables | 243 | — | 243 | (1,037 | ) | (2,106 | ) | |||||||||||||
| (Increase)/decrease in taxation receivables | (1,238 | ) | — | (1,238 | ) | (2,111 | ) | 1,697 | ||||||||||||
| Increase/(decrease) in trade and other payables | 216 | — | 216 | 19 | (1,052 | ) | ||||||||||||||
| Cash outflow from operating activities | (11,481 | ) | — | (11,481 | ) | (13,927 | ) | (22,674 | ) | |||||||||||
| Cash flows from investing activities | ||||||||||||||||||||
| Purchases of property, plant and equipment | (117 | ) | — | (117 | ) | (160 | ) | (163 | ) | |||||||||||
| Purchase of software and other intangibles | — | — | — | (15 | ) | (15 | ) | |||||||||||||
| Net cash outflow from investing activities | (117 | ) | — | (117 | ) | (175 | ) | (178 | ) | |||||||||||
| Cash flows from financing activities | ||||||||||||||||||||
| Proceeds from issues of ordinary share capital | 27,904 | — | 27,904 | 22,000 | 29,741 | |||||||||||||||
| Expenses on issue of shares | (4,217 | ) | — | (4,217 | ) | (1,498 | ) | (1,594 | ) | |||||||||||
| Lease liability payments | (37 | ) | — | (37 | ) | (126 | ) | (188 | ) | |||||||||||
| Interest received | 2 | — | 2 | 5 | 5 | |||||||||||||||
| Interest paid | (83 | ) | — | (83 | ) | (88 | ) | (173 | ) | |||||||||||
| Net cash inflow from financing activities | 23,569 | — | 23,569 | 20,293 | 27,791 | |||||||||||||||
| Increase in cash and cash equivalents | 11,971 | — | 11,971 | 6,191 | 4,939 | |||||||||||||||
| Cash and cash equivalents at the start of the year | 8,775 | — | 8,775 | 3,836 | 3,836 | |||||||||||||||
| Cash and cash equivalents at the end of the period | 20,746 | — | 20,746 | 10,027 | 8,775 | |||||||||||||||