Exhibit 99.1
GW PHARMACEUTICALS PLC
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page | |
Unaudited condensed consolidated income statement | 2 |
Unaudited condensed consolidated statement of changes in equity | 4 |
Condensed consolidated balance sheets | 5 |
Unaudited condensed consolidated cash flow statements | 6 |
Notes to the condensed consolidated financial statements | 7 |
GW Pharmaceuticals plc
Condensed consolidated income statement
Three months ended 30 June 2018 and 2017
30 June | 30 June | 30 June | ||||||||||||
Notes | 2018 | 2018 | 2017 | |||||||||||
$000’s | £000’s | £000’s | ||||||||||||
Revenue | 3 | 3,457 | 2,623 | 2,412 | ||||||||||
Cost of sales | (1,741 | ) | (1,321 | ) | (1,110 | ) | ||||||||
Research and development expenditure | (24,503 | ) | (18,592 | ) | (27,936 | ) | ||||||||
Sales, general and administrative expenses | (35,158 | ) | (26,677 | ) | (11,751 | ) | ||||||||
Net foreign exchange gain/(loss) | 21,825 | 16,560 | (8,410 | ) | ||||||||||
Operating loss | (36,120 | ) | (27,407 | ) | (46,795 | ) | ||||||||
Interest expense | (303 | ) | (230 | ) | (266 | ) | ||||||||
Interest and other income | 1,452 | 1,102 | 456 | |||||||||||
Loss before tax | (34,971 | ) | (26,535 | ) | (46,605 | ) | ||||||||
Tax (expense)/benefit | 4 | (734 | ) | (557 | ) | 6,247 | ||||||||
Loss for the period | (35,705 | ) | (27,092 | ) | (40,358 | ) | ||||||||
Loss per share – basic and diluted | (10.5 | c) | (8.0 | p) | (13.3 | p) | ||||||||
Loss per ADS – basic and diluted(1) | (126.0 | c) | (96.0 | p) | (159.6 | p) | ||||||||
Weighted average ordinary shares outstanding (in millions) – basic and diluted | 338.6 | 303.9 |
All activities relate to continuing operations.
(1)Each ADS represents 12 ordinary shares
Condensed consolidated statement of comprehensive loss
For the three months ended 30 June 2018 and 2017
30 June 2018 £000’s | 30 June 2017 £000’s | |||||||
Loss for the period | (27,092 | ) | (40,358 | ) | ||||
Items that may be reclassified subsequently to profit or loss | ||||||||
Exchange gain/(loss) on retranslation of foreign operations | 959 | (508 | ) | |||||
Other comprehensive gain/(loss) for the period | 959 | (508 | ) | |||||
Total comprehensive loss for the period | (26,133 | ) | (40,866 | ) |
2 |
GW Pharmaceuticals plc
Condensed consolidated income statement
Nine months ended 30 June 2018 and 2017
30 June | 30 June | 30 June | ||||||||||||
Notes | 2018 | 2018 | 2017 | |||||||||||
$000’s | £000’s | £000’s | ||||||||||||
Revenue | 3 | 14,154 | 10,740 | 6,095 | ||||||||||
Cost of sales | (4,440 | ) | (3,369 | ) | (2,512 | ) | ||||||||
Research and development expenditure | (107,608 | ) | (81,650 | ) | (80,007 | ) | ||||||||
Sales, general and administrative expenses | (81,321 | ) | (61,704 | ) | (27,725 | ) | ||||||||
Net foreign exchange loss | (801 | ) | (608 | ) | (583 | ) | ||||||||
Operating loss | (180,016 | ) | (136,591 | ) | (104,732 | ) | ||||||||
Interest expense | (923 | ) | (700 | ) | (509 | ) | ||||||||
Interest and other income | 4,783 | 3,629 | 1,042 | |||||||||||
Loss before tax | (176,156 | ) | (133,662 | ) | (104,199 | ) | ||||||||
Tax (expense)/benefit | 4 | (4,014 | ) | (3,046 | ) | 13,878 | ||||||||
Loss for the period | (180,170 | ) | (136,708 | ) | (90,321 | ) | ||||||||
Loss per share – basic and diluted | (54.7 | c) | (41.5 | p) | (29.8 | p) | ||||||||
Loss per ADS – basic and diluted(1) | (656.4 | c) | (498.0 | p) | (357.6 | p) | ||||||||
Weighted average ordinary shares outstanding (in millions) – basic and diluted | 329.6 | 303.4 |
All activities relate to continuing operations.
(1)Each ADS represents 12 ordinary shares
Condensed consolidated statement of comprehensive loss
For the nine months ended 30 June 2018 and 2017
30 June 2018 £000’s |
30 June 2017 £000’s | |||||||
Loss for the period | (136,708 | ) | (90,321 | ) | ||||
Items that may be reclassified subsequently to profit or loss | ||||||||
Exchange gain/(loss) on retranslation of foreign operations | 19 | (267 | ) | |||||
Other comprehensive gain/(loss) for the period | 19 | (267 | ) | |||||
Total comprehensive loss for the period | (136,689 | ) | (90,588 | ) |
3 |
GW Pharmaceuticals plc
Condensed consolidated statement of changes in equity
Nine months ended 30 June 2018 and 2017
Share | ||||||||||||||||||||
Share | premium | Other | Accumulated | |||||||||||||||||
capital | account | reserves | deficit | Total | ||||||||||||||||
£000’s | £000’s | £000’s | £000’s | £000’s | ||||||||||||||||
Balance at 1 October 2016 | 302 | 556,477 | 19,538 | (177,827 | ) | 398,490 | ||||||||||||||
Exercise of share options | 2 | 88 | - | - | 90 | |||||||||||||||
Share-based payment transactions | - | - | - | 8,141 | 8,141 | |||||||||||||||
Loss for the period | - | - | - | (90,321 | ) | (90,321 | ) | |||||||||||||
Deferred tax attributable to unrealized share option gains | - | - | - | (251 | ) | (251 | ) | |||||||||||||
Other comprehensive loss | - | - | (267 | ) | - | (267 | ) | |||||||||||||
Balance at 30 June 2017 | 304 | 556,565 | 19,271 | (260,258 | ) | 315,882 | ||||||||||||||
Balance at 1 October 2017 | 304 | 556,570 | 18,822 | (297,521 | ) | 278,175 | ||||||||||||||
Exercise of share options | 2 | - | - | - | 2 | |||||||||||||||
Issue of share capital | 33 | 223,037 | - | - | 223,070 | |||||||||||||||
Expense of new equity issue | - | (911 | ) | - | - | (911 | ) | |||||||||||||
Share-based payment transactions | - | - | - | 15,742 | 15,742 | |||||||||||||||
Loss for the period | - | - | - | (136,708 | ) | (136,708 | ) | |||||||||||||
Deferred tax attributable to unrealized share option gains | - | - | - | 2,202 | 2,202 | |||||||||||||||
Other comprehensive gain | - | - | 19 | - | 19 | |||||||||||||||
Balance at 30 June 2018 | 339 | 778,696 | 18,841 | (416,285 | ) | 381,591 |
4 |
GW Pharmaceuticals plc
Condensed consolidated balance sheets
As at 30 June 2018 and 30 September 2017
As at 30 June | As at 30 June | As at 30 September | ||||||||||||
Notes | 2018 | 2018 | 2017 | |||||||||||
Non-current assets | $000’s | £000’s | £000’s | |||||||||||
Goodwill | 6,866 | 5,210 | 5,210 | |||||||||||
Other intangible assets | 2,855 | 2,166 | 1,049 | |||||||||||
Property, plant and equipment | 65,768 | 49,903 | 43,666 | |||||||||||
Deferred tax asset | 11,287 | 8,564 | 6,282 | |||||||||||
86,776 | 65,843 | 56,207 | ||||||||||||
Current assets | ||||||||||||||
Inventories | 5 | 26,333 | 19,981 | 4,244 | ||||||||||
Taxation recoverable | 2,499 | 1,896 | 20,072 | |||||||||||
Trade receivables and other assets | 23,367 | 17,730 | 11,217 | |||||||||||
Cash and cash equivalents | 440,190 | 334,005 | 241,175 | |||||||||||
492,389 | 373,612 | 276,708 | ||||||||||||
Total assets | 579,165 | 439,455 | 332,915 | |||||||||||
Current liabilities | ||||||||||||||
Trade and other payables | 6 | (52,876 | ) | (40,121 | ) | (33,119 | ) | |||||||
Current tax liabilities | (2,558 | ) | (1,941 | ) | (838 | ) | ||||||||
Obligations under finance leases | (282 | ) | (214 | ) | (205 | ) | ||||||||
Deferred revenue | (1,074 | ) | (815 | ) | (2,307 | ) | ||||||||
(56,790 | ) | (43,091 | ) | (36,469 | ) | |||||||||
Non-current liabilities | ||||||||||||||
Trade and other payables | 6 | (11,602 | ) | (8,803 | ) | (9,256 | ) | |||||||
Obligations under finance leases | (6,053 | ) | (4,593 | ) | (4,755 | ) | ||||||||
Deferred revenue | (1,815 | ) | (1,377 | ) | (4,260 | ) | ||||||||
Total liabilities | (76,260 | ) | (57,864 | ) | (54,740 | ) | ||||||||
Net assets | 502,905 | 381,591 | 278,175 | |||||||||||
Equity | ||||||||||||||
Share capital | 447 | 339 | 304 | |||||||||||
Share premium account | 1,026,255 | 778,696 | 556,570 | |||||||||||
Other reserves | 24,831 | 18,841 | 18,822 | |||||||||||
Accumulated deficit | (548,628 | ) | (416,285 | ) | (297,521 | ) | ||||||||
Total equity | 502,905 | 381,591 | 278,175 | |||||||||||
5 |
GW Pharmaceuticals plc
Condensed consolidated cash flow statements
For the nine months ended 30 June 2018 and 2017
Nine months ended | Nine months ended | Nine months ended | ||||||||||
30 June | 30 June | 30 June | ||||||||||
2018 | 2018 | 2017 | ||||||||||
$000’s | £000’s | £000’s | ||||||||||
Loss for the period | (180,170 | ) | (136,708 | ) | (90,321 | ) | ||||||
Adjustments for: | ||||||||||||
Interest and other income | (4,783 | ) | (3,629 | ) | (1,042 | ) | ||||||
Interest expense | 923 | 700 | 509 | |||||||||
Tax expense/(benefit) | 4,014 | 3,046 | (13,878 | ) | ||||||||
Depreciation of property, plant and equipment | 6,190 | 4,697 | 3,781 | |||||||||
Impairment of property, plant and equipment | - | - | 95 | |||||||||
Reversal of impairment of property, plant and equipment | - | - | (216 | ) | ||||||||
Amortization of intangible assets | 480 | 364 | 168 | |||||||||
Net foreign exchange losses | 800 | 607 | 583 | |||||||||
(Decrease)/increase in provision for inventories | (477 | ) | (362 | ) | 80 | |||||||
Decrease in deferred signature fees | (4,169 | ) | (3,163 | ) | (1,097 | ) | ||||||
Share-based payment charge | 20,743 | 15,742 | 8,141 | |||||||||
Loss on disposal of property, plant and equipment | 149 | 113 | 605 | |||||||||
(156,300 | ) | (118,593 | ) | (92,592 | ) | |||||||
(Increase)/decrease in inventories | (20,789 | ) | (15,774 | ) | 52 | |||||||
Increase in trade receivables and other assets | (3,033 | ) | (2,301 | ) | (1,914 | ) | ||||||
Increase/(decrease) in trade and other payables and deferred revenue | 9,305 | 7,061 | (1,279 | ) | ||||||||
Research and development tax credits received | 26,509 | 20,114 | 21,679 | |||||||||
Income taxes paid | (2,562 | ) | (1,944 | ) | (1,277 | ) | ||||||
Net cash outflow from operating activities | (146,870 | ) | (111,437 | ) | (75,331 | ) | ||||||
Investing activities | ||||||||||||
Interest received | 2,205 | 1,673 | 970 | |||||||||
Purchases of property, plant and equipment | (22,399 | ) | (16,996 | ) | (12,989 | ) | ||||||
Purchase of intangible assets | (1,730 | ) | (1,313 | ) | (468 | ) | ||||||
Net cash outflow from investing activities | (21,924 | ) | (16,636 | ) | (12,487 | ) | ||||||
Financing activities | ||||||||||||
Proceeds on exercise of share options | 3 | 2 | 91 | |||||||||
Proceeds of new equity issue | 293,987 | 223,070 | - | |||||||||
Expenses of new equity issue | (1,201 | ) | (911 | ) | (134 | ) | ||||||
Interest paid | (923 | ) | (700 | ) | (729 | ) | ||||||
Repayment of fit out funding | (384 | ) | (291 | ) | (748 | ) | ||||||
Repayment of obligations under finance leases | (202 | ) | (153 | ) | (160 | ) | ||||||
Net cash inflow/(outflow) from financing activities | 291,280 | 221,017 | (1,680 | ) | ||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (144 | ) | (114 | ) | (810 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | 122,342 | 92,830 | (90,308 | ) | ||||||||
Cash and cash equivalents at beginning of the period | 317,848 | 241,175 | 374,392 | |||||||||
Cash and cash equivalents at end of the period | 440,190 | 334,005 | 284,084 | |||||||||
6 |
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2018
1. Significant accounting policies
Basis of preparation
These unaudited condensed consolidated interim financial statements for the three and nine month periods ended 30 June 2018 and 30 June 2017 of GW Pharmaceuticals plc and subsidiaries (collectively, the “Group”) have been prepared in accordance with International Accounting Standard 34 – “Interim Financial Reporting” (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”) and as endorsed by the European Union. These statements were approved by the Board on 7 August 2018.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB and as adopted by the European Union have been condensed or omitted as permitted by IAS 34. The balance sheet as at 30 September 2017 was derived from the audited financial statements.
The significant accounting policies and methods of computation adopted in the preparation of these condensed consolidated interim financial statements are consistent with those used in the preparation of the Group’s annual audited financial statements for the year ended 30 September 2017 in accordance with IFRS, as issued by the IASB and as adopted by the European Union. These condensed consolidated interim financial statements include all adjustments necessary to fairly state the results of the interim period and the Group believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year.
The Group has not adopted early any standard, interpretation or amendment that was issued but is not yet effective.
Solely for the convenience of the reader, unless otherwise indicated, all pound sterling amounts stated in the Condensed Consolidated Balance Sheet as at 30 June 2018, the Condensed Consolidated Income Statement and the Condensed Consolidated Cash Flow Statement for the three and nine months ended 30 June 2018 have been translated into U.S. dollars at the rate on 30 June 2018 of $1.31792 to £1.0000. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as at that or any other date.
The Directors do not consider the business to be seasonal or cyclical.
Going concern
At 30 June 2018 the Group had cash and cash equivalents of £334.0 million. The Directors have considered the financial position of the Group, its cash position and forecast cash flows for the 12-month period from the date of this report when considering going concern. They have also considered the Group’s key risks and uncertainties affecting the likely development of the business. In the light of this review, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least a 12-month period from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.
7 |
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2018
2. Segmental Information
Operating Segments
In accordance with IFRS 8 – “Operating Segments”, the chief operating decision maker (CODM), who is responsible for allocating resources and assessing performance of the Group, has been identified as a sub-group of the Executive Leadership Team (ELT), consisting of those members charged with executive management of the Group’s business activities.
During the first quarter of financial year ended 30 September 2018, the Group’s research and collaboration agreement with Otsuka Pharmaceuticals was terminated by mutual agreement. As part of this process, the rights to develop and commercialize Sativex in the United States were returned to the Group. As a result of this, the recognition of certain advance payments and deferred signature fee income balances in the Income Statement was accelerated on the basis that no further obligations remain to be fulfilled by the Group. The Group’s CODM considered that, following this termination, the nature of the Group’s operations has changed such that a review of operating segments was performed. The results of this identified that reporting a single operating segment has become appropriate, and reflects the Group’s strategy of discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. Accordingly, the information required under IFRS 8 “Operating Segments”, including the respective comparative information, has been presented for the single operating segment in Note 3 below.
The Group has licensing agreements for the commercialization of Sativex® with Almirall S.A. in Europe (excluding the United Kingdom) and Mexico, Bayer HealthCare AG in the United Kingdom and Canada, Neopharm Group in Israel, Emerge Health Pty. Ltd. in Australasia and Malaysia and Ipsen Biopharm Ltd. in Latin America (excluding Mexico and the Islands of the Caribbean). Revenues include product sales, royalties, license, collaboration and technical access fees, and development and approval milestone fees.
3. Revenue
Revenues arising from the Group’s activities during the period were as follows:
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||||||
30 June | 30 June | 30 June | 30 June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
£000’s | £000’s | £000’s | £000’s | |||||||||||||
Product sales | 2,281 | 1,790 | 5,972 | 4,427 | ||||||||||||
Research and development fees | 138 | 236 | 1,494 | 459 | ||||||||||||
License, collaboration and technical access fees | 204 | 276 | 3,163 | 1,099 | ||||||||||||
Development milestones | - | 110 | 111 | 110 | ||||||||||||
2,623 | 2,412 | 10,740 | 6,095 |
8 |
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2018
3. Revenue (continued)
Revenues from the Group’s major customers, ranked according to the results of the nine month current period, are included within revenue as follows:
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||||||
30 June | 30 June | 30 June | 30 June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
£000’s | £000’s | £000’s | £000’s | |||||||||||||
Customer A | 1,651 | 1,535 | 4,485 | 3,556 | ||||||||||||
Customer B | 137 | 306 | 4,042 | 668 | ||||||||||||
Customer C | 583 | 398 | 1,515 | 1,174 | ||||||||||||
Customer D | 101 | 114 | 323 | 121 |
Geographical analysis of revenue by destination of customer:
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||||||
30 June | 30 June | 30 June | 30 June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
£000’s | £000’s | £000’s | £000’s | |||||||||||||
UK | 533 | 374 | 1,492 | 1,196 | ||||||||||||
Europe (excluding UK) | 1,651 | 1,528 | 4,484 | 3,846 | ||||||||||||
United States | - | 196 | 3,693 | 300 | ||||||||||||
Canada | 277 | 204 | 662 | 384 | ||||||||||||
Asia | 162 | 110 | 409 | 369 | ||||||||||||
2,623 | 2,412 | 10,740 | 6,095 |
4. Tax (expense)/benefit
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||||||
30 June | 30 June | 30 June | 30 June | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
£000’s | £000’s | £000’s | £000’s | |||||||||||||
Current period research and development tax credit | - | (5,568 | ) | - | (12,789 | ) | ||||||||||
Adjustments in respect of prior year tax credit | (26 | ) | (541 | ) | (82 | ) | (732 | ) | ||||||||
Deferred tax credit | (1,053 | ) | (355 | ) | (2,150 | ) | (355 | ) | ||||||||
Reclassification of amounts previously charged to equity | 1,966 | (251 | ) | 2,226 | (251 | ) | ||||||||||
Current period tax (credit)/charge | (330 | ) | 468 | 3,052 | 249 | |||||||||||
Total charge/(credit) for the period | 557 | (6,247 | ) | 3,046 | (13,878 | ) |
In the nine months ended 30 June 2018, the Group recognized the impact of The Tax Cuts and Jobs Act (the Act), which was signed into law on 22 December 2017, and thus enacted at this date.
9 |
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2018
4. Tax (expense)/benefit (continued)
With effect from 1 October 2017, the Group is also no longer able to qualify tax credits in respect of the Small and Medium sized enterprises (SME) R&D relief under the Finance Act 2000. The Group now qualifies for the Research and Development Expenditure Credit (RDEC), available to large enterprises in the UK. An above-the-line RDEC credit of £0.4 million has been recorded within Interest and Other Income for the three months ended 30 June 2018 and £1.9 million within Interest and Other Income for the nine months ended 30 June 2018.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the asset to be recovered.
5. Inventories
30 June | 30 September | |||||||
2018 | 2017 | |||||||
£000’s | £000’s | |||||||
Raw materials | 578 | 199 | ||||||
Work in progress | 18,894 | 3,379 | ||||||
Finished goods | 509 | 666 | ||||||
19,981 | 4,244 |
Inventory is stated net of a provision for inventories, calculated in accordance with the Group’s accounting policy. The movement in the provision for inventories is as follows:
£000’s | ||||
Opening balance – as at 1 October 2016 | 118 | |||
Write-down of inventories to net realizable value | 136 | |||
Write off of inventories included in the provision | (169 | ) | ||
Reversal of write-down of inventories | (55 | ) | ||
Closing balance as at 30 June 2017 | 30 |
Opening balance – as at 1 October 2017 | 41 | |||
Write-down of inventories to net realizable value | 17,140 | |||
Write off of inventories included in the provision | (162 | ) | ||
Reversal of write-down of inventories | (16,778 | ) | ||
Closing balance as at 30 June 2018 | 241 |
During the current period, and after notification by the FDA of the Group’s successful submission of a New Drug Application, capitalization of Epidiolex-related plant material commenced. This inventory was subject to a full provision until FDA approval was received on 25 June 2018. We have determined that this presents clear evidence to indicate an increase in the net realizable value and therefore the provision can be reversed for the element of inventory expected to be fully commercialized.
10 |
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2018
6. Trade and other payables
30 June | 30 September | |||||||
2018 | 2017 | |||||||
£000’s | £000’s | |||||||
Amounts falling due within one year | ||||||||
Other creditors and accruals | 26,389 | 19,335 | ||||||
Trade payables | 6,701 | 5,807 | ||||||
Clinical trial accruals | 4,667 | 5,520 | ||||||
Other taxation and social security | 1,934 | 2,032 | ||||||
Fit out funding | 410 | 389 | ||||||
Onerous lease provision | 20 | 36 | ||||||
40,121 | 33,119 | |||||||
Amounts falling due after one year | ||||||||
Fit out funding | 7,646 | 7,957 | ||||||
Other creditors and accruals | 1,157 | 1,288 | ||||||
Onerous lease provision | - | 11 | ||||||
8,803 | 9,256 |
Fit out funding represents £8.1 million (30 September 2017: £8.3 million) owed to the Group’s landlord reflecting the liability to repay the £7.8 million of fit out funding received to fund the expansion and upgrades to manufacturing facilities and associated interest of £2.6 million (30 September 2017: £2.2 million), net of payments to date of £2.2 million (30 September 2017: £1.7 million).
11 |