The resolution asking for disapplication of pre-emption rights in relation to a capped number of shares is a standard resolution that almost all listed companies, from large pharmaceutical companies, like GSK, to the smaller listed businesses request at their respective AGMs.  This limited disapplication allows management teams crucial manoeuvrability when it comes to the issuance of new shares.

The passing of this resolution is important to Valirx to ensure that we can continue to operate the Company in the manner that we feel will best benefit all our shareholders in the longer term.  In many corporate transactions, speed is off the essence to secure funding or make payment for an acquisition.  Without a disapplication of pre-emption rights, we may be unable to offer our shares to institutional investors, or to negotiate with acquisition targets to further our ambition of building the tCRO.  As such negotiations are commercially in confidence, we would be unable to proceed effectively if shareholder approval had to be sought for each use of the authorised shares.

Our commitment to shareholders to encourage participation in placings remains unchanged by this resolution, and we continue to seek ways in which our shareholders receive equal treatment regardless of size, in particular through open offers and such like.

This does not increase the shares available to be issued.

Shareholder pre-emption rights are the right of all existing shareholders to be offered the chance to subscribe for shares first in any fundraise in proportion to their existing holding. Pre-emption rights are routinely disapplied where shares may be issued for cash other than to existing shareholders exactly in proportion to their holding which can normally on be achieved in a rights issue to all shareholders which is a costly, time consuming and difficult to execute.

By requesting disapplication of pre-emption rights in advance, we enable our headroom of pre-authorised shares to be used without waiting for a general meeting.  The amount of pre-authorised disapplication is capped so that larger raises will still require shareholder approval.

Most companies, particularly if listed, seek shareholder permission at every AGM to allot up to a set number of shares without needing to come back for a specific shareholder vote. This pre-authorised headroom allows the company to issue new shares for any purpose.  These purposes could range from an employee share option scheme, or payment for goods or services in shares instead of cash, or as consideration for an acquisition of a new technology or asset, or to raise funds through the issue of new shares for cash for use by the business for any purpose.

 The authorised headroom is generally limited to a specified number of shares to provide shareholders with confidence that the Company is respectful of the fact that issuance of new shares may dilute the holding of existing shareholders.

 The allotted headroom from each AGM expires at the following years AGM, which is why it is requested on an annual basis.

BC201 continues to be developed for treatment of patients in the current Coronavirus pandemic, but also with a view to widening usage to viral-induced sepsis and other diseases with similar immune system driven causes.

The next steps will be to complete the preclinical work and to commence regulatory proceedings if a clinical trial is planned outside of the emergency pandemic situation.

BC201 is undergoing preclinical experiments to assess whether the theoretical mechanism of action is demonstrated in appropriate biological systems.  The development is being carried out by the consortium that has been formed between ValiRx, OncoLytika and Black Cat Bio. This consortium has commissioned the experimental work to date, is applying for UK government grants, and actively seeking development partners to progress the project.

The processes for fast-tracking medicines to market approval and patient access are driven predominantly by the level of medical need of those patients.  For example, patients suffering a disease for which there are few marketed treatments available may be able to access treatments that are still in development.

The Coronavirus pandemic has provided an extreme example of both treatments and vaccines being fast-tracked to receive emergency use authorisation in patients.

BC201 combines VAL201, which has achieved an excellent safety and tolerability profile in the Phase 1/2 clinical trial, with other agents that are recognised as “safe”.  This profile allows us to propose this for emergency use while preclinical experiments are initiated to further explore the scientific rationale.  The broad nature of the mechanism of action for immune modulation allows for further development of the programme into the treatment of sepsis, and to be ready for future pandemics.

BC201 incorporates the VAL201 peptide as a component of a possible treatment for patients suffering severe symptoms of Covid-19. The mechanism of action for VAL201 in this application should be considered from several angles.

• Firstly, the link between the levels of expression of the Androgen Receptor on cells and susceptibility to severe symptoms of Covid-19 are clear and well published.  Treatment with VAL201 has the potential to moderate activity of the Androgen Receptors and expression of the protease TMPRSS2, which is required alongside the ACE2 receptor for the virus to enter the cell, thus reducing infectivity.
• Secondly, the role of VAL201 in blocking the hormone mediated activity of SRC kinase is proposed to have a direct impact of the production of Neutrophil Extracellular Traps (NETs).  These NETs are part of the immune response and are initially helpful for removing virus (or bacteria) after an infection.  In severe cases of Covid-19, just as in sepsis, these NETs can cause bystander collateral damage, causing multi-organ failure, which triggers further production of NETs and perpetuates the cycle.  By breaking this NET cycle, severe symptoms caused by the over-reaction of the immune system is moderated.  It is not as straightforward as an “anti-inflammatory effect”.
• Finally, as the virus uses the infected cell’s internal machinery to replicate, the inhibition of a key pathway by the VAL201 peptide, may also slow the replication rate of the virus, giving additional time for the immune system to respond appropriately.

This multi-faceted approach is considered a key advantage of the BC201 programme, and the consortium developing BC201 is investigating each benefit individually, as well as in synergy.

Our preferred business model is to partner projects at the earliest feasible stage in order to reduce risk, reduce direct cost, and to increase the range of skills and expertise being input to the project. Each project has different needs in a partner and will be assessed accordingly.

VAL301 has an agreement already announced with a Japanese Pharma Company, whereby the third party is covering the costs of the current developments and sharing the information generated.

Partner identities can be released only when agreements have been finalised in order to avoid prejudicing ongoing negotiations. Even when an agreement is reached, there can be continued restrictions on announcing the identity of the partner according to their own corporate policies. However, all partners will be selected for their suitability to continue the science, with resources and expertise as a prerequisite.

ValiRx aims to partner projects during the development process, such that drugs within the ValiRx pipeline are unlikely to be brought onto the market directly by ValiRx. As specialists in discovery, preclinical and early clinical phase development, ValiRx adds value at the early stage of drug development. The projects ready for late stage clinical development will be passed to specialists in this stage, and then likely onto commercialisation specialists who will bring the drugs to market.

VAL201 has completed a Phase 1/2 clinical trial, so is required to complete Phase 2 and 3 before market authorisation can be considered – the timeline for this will be dependent on the design of those trials. VAL301 is at preclinical stage, so requires all three clinical phases of development. VAL401 has a shorter route to market due to the nature of it as a reformulated generic drug, and requires at least one further clinical trial (depending on size and results) before market authorisation could be considered.

Therefore, of these three pipeline products, VAL401 can be considered furthest along the development pipeline. However, the timing of market authorisation is difficult to predict, especially as it is controlled by a third party.

A priority for ValiRx is to secure near-term funding by out-licencing or partnering the existing clinical programmes (VAL201 and VAL401). We are in active discussions with a number of companies to achieve this.

In the longer-term, the strategy we introduced last year sees revenues entering the Company from two sources.

Firstly, our strategy for creating subsidiary companies and assisting in their operation is intended to bring fees into ValiRx, which we expect to cover day-to-day working capital requirements as the business builds.  This will be via service contracts between each subsidiary and ValiRx, whereby ValiRx will continue to provide the corporate framework in which the subsidiary can operate, including, for example, project management resource, IT and accountancy functions.

Secondly, we expect to retain an equity interest in each subsidiary, so that ValiRx will benefit from an exit event, e.g., out-licence or sale.

The exact timing of the first revenues to enter the Company is difficult to predict, but we are confident that the strategy is the right one for the Company, and will result in the most efficient route to revenues.

A clinical trial has been planned to treat newly diagnosed patients with standard of care in conjunction with VAL401, in a blinded comparison against standard of care with placebo in around 120 patients.

This clinical trial is outside the remit for direct ValiRx invovlement, and external partners are being sought to further this development.

VAL401 completed a pilot Phase 2 clinical trial in end-stage non-small cell lung cancer patients. This trial demonstrated an improvement in patient survival when compared to case matched patients in the same clinics who were not enrolled on the trial. The patients also reported improvements in quality of life, including improvements in pain, nausea and appetite.

On analysis of the results of this trial, independent oncologists recommended the next trial to be in patients with pancreatic ductal adenocarcinoma (pancreatic cancer) who typically present with symptoms with particular burdens of pain, nausea and anorexia.

A clinical development plan has been compiled that considers several different clinical trial designs and the level of preclinical safety data that would be needed to collect to enable them.

VAL301 uses the same active ingredient as VAL201, but proposes the treatment of women with endometriosis. VAL301 is in preclinical development. As it uses the same ingredient as VAL201, the safety and tolerability data collected during the clinical trial, and preclinical safety data collected to support that trial can also be used to support development of VAL301. However, additional preclinical work is required to ensure that the treatment does not adversely affect otherwise healthy women, as the prostate cancer trial only enrolled men with a terminal cancer diagnosis.

ValiRx is currently in the process of identifying a partner to progress further scientific development of VAL201. Such a partner would be able to fund a larger trial to look in greater detail at the activity of VAL201 in patients, with the confidence of knowing they are building on the encouraging results we have already gathered.

The exact nature of the partnership and of the next clinical trial will depend on the identity of that partner, but the next stage of scientific development is expected to be a full Phase 2 clinical trial.

The results from the Phase 1/2 clinical trial of VAL201 can be considered from two angles. Firstly, the safety and tolerability of the treatment was seen to be excellent. As this was a first-in-man trial, safety is always the first consideration, to ensure that the principle of “first do no harm” is fulfilled.

Secondly, the assessment of whether the treatment provides a positive disease impact returned the result that 54.5% of patients responded to treatment by not seeing any disease progression during the trial.

Although this only considered 11 patients (with 6 responding) across multiple dose levels, this early indication of disease impact supports the conclusion that further research is warranted.

In our announcement of 28 September 2020, we listed all of the events that were recorded as being related to the administration of VAL201. The minor events reported were either temporary, so subsided within a matter of hours, or were judged not to cause a disproportionate hindrance to the daily life of the patients. Minor events of this type are typical in cancer drug trials.

The ’injection site disorders’ covers events ranging from discomfort at the site of the injection, a slight temporary rash at the site of injection, or a bruise. These would be common during any injection process.

The other minor effects reported included raised blood pressure, bradycardia (low heart rate), fatigue, dyspepsia (indigestion) and muscle spasm. All of which are typical minor side effects from cancer drugs.

The only “serious” drug-related event was the severe raised blood pressure (hypertension) in one patient at 8 mg/kg. This patient had a history of hypertension and, after treatment with an anti-hypertensive drug, continued in the trial at the same dose.

It is important to see these adverse events in the context of the disease and current drugs. The treatment of prostate cancer by existing hormone deprivation therapy has debilitating side effects related to reduced testosterone levels. None of these side effects were reported for VAL201, adding to the evidence that VAL201 acts with a very precise mechanism, preventing testosterone driven cancerous growth and avoiding related side effects that reduce patients’ quality of life. Furthermore, the more severe effects typical of traditional chemotherapy were also not seen, such as nausea, weight loss, hair loss and extreme tiredness.

All drug related events recorded by our patients are important and must be assessed further in future clinical trials. Nevertheless, the safety and tolerability of VAL201 as demonstrated in this trial is excellent.

VAL201 completed a Phase 1/2 clinical trial in the treatment of patients with prostate cancer in 2020. The results from this trial underwent an initial analysis, and readout that the treatment was seen to be safe and well tolerated at the dose levels administered, and that 54.5% of patients “responded” to the treatment, that is that their cancer did not progress during their period on trial.

Drugs are typically progressed through Phase 1, Phase 2 and Phase 3 clinical trials, with at least one trial being run at each stage before being considered for authorisation for use in the general patient population.