TC BioPharm(TCBP) - 2024 Q4 - Annual Report

PART I Item 3. Key Information This section details the company's extensive principal risks, including financial instability, clinical development hurdles, regulatory challenges, intellectual property issues, and market liquidity limitations due to Nasdaq delisting Risk Factors The company faces significant risks including recurring net losses, substantial doubt about its going concern ability, reliance on external financing for novel GD-T cell therapies, and challenges from Nasdaq delisting - The company has a history of operating losses and expects them to continue, having never achieved profitability. It requires ongoing financing to sustain operations[29][32] Financial Performance and Position | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Loss | £12.2 million | £5.9 million | | Accumulated Deficit (as of Dec 31, 2024) | £51.0 million | N/A | - Both the company and its independent registered public accounting firm have expressed substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flow[29][45] - The company's ADSs were delisted from the Nasdaq Capital Market on March 21, 2025, and are now quoted on the OTC Pink marketplace, which limits the public market and may hinder future financing[34][35] - The company's lead product candidate, OmnImmune®, and its other GD-T cell therapies are novel approaches with inherent development risks, requiring extensive and costly regulatory approvals that may not be obtained in a timely manner, if at all[29][50] - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater financial and technical resources[30][85] - Protecting intellectual property is critical but challenging due to costs, jurisdictional complexities, and potential challenges from third parties[31][147] Item 4. Information on the Company TC BioPharm is a clinical-stage biopharmaceutical company developing allogeneic GD-T cell immunotherapies for cancer and viral infections, advancing OmnImmune® into pivotal trials and leveraging its integrated GMP manufacturing facility History and Development of the Company TC BioPharm (Holdings) plc, incorporated in 2021, completed its Nasdaq IPO in 2022 but transitioned to OTC Markets in March 2025 following delisting, with an appeal pending - The company was incorporated on October 25, 2021, as a public limited company in Scotland to act as the holding company for TC BioPharm Limited[280] - The company completed its Initial Public Offering (IPO) on the Nasdaq Capital Market on February 10, 2022[288] - The company's securities were suspended from Nasdaq and began trading on the OTC Markets on March 24, 2025, under the symbols TCBPY and TCBPWF, with an appeal of the delisting pending[288] - The company has executed multiple ADS ratio changes, with the most recent on February 10, 2025, changing the ratio to one ADS representing 4,000 ordinary shares[286] Business TC BioPharm develops novel allogeneic GD-T cell immunotherapies, with lead product OmnImmune® advancing to pivotal trials for AML, and also develops genetically modified CAR-T products, leveraging its in-house GMP manufacturing facility - The company is a clinical-stage biopharmaceutical firm focused on developing allogeneic gamma delta T (GD-T) cell immunotherapies for cancer and viral infections[290] - The lead product, OmnImmune®, is an unmodified allogeneic GD-T therapy for Acute Myeloid Leukemia (AML), which has shown good tolerability and preliminary efficacy in clinical studies, leading to FDA orphan drug designation[291][292] - The company is advancing OmnImmune® into Phase 2b/pivotal (Phase 3) clinical studies under the trial name 'ACHIEVE' for AML patients who have failed induction therapy[296] - TCB is also developing genetically modified CAR-T products using a patented co-stimulatory approach designed to enhance safety by avoiding attacks on healthy cells, a key issue with conventional CAR-T therapies[293][316][317] - A core competitive advantage is its fully integrated, in-house GMP-grade manufacturing facility in Glasgow, Scotland, which controls the entire value chain from development to clinical supply, reducing costs and improving efficiency[366][380] - As of May 7, 2025, the company owns 23 granted patents and has 9 pending applications across 3 families, with an exclusive license to an additional patent family, covering its GD-T cell and CAR-T technologies[393] Organizational Structure TC BioPharm (Holdings) plc operates with three wholly-owned subsidiaries, including TC BioPharm Limited for R&D, and entities in the Netherlands and North America for clinical and commercial expansion - The company has three wholly-owned subsidiaries: TC BioPharm Limited (principal operations), TC BioPharm BV (Netherlands), and TC BioPharm (North America) Inc. (USA)[481] Property, Plant and Equipment The company's headquarters, research, and manufacturing facilities are located in a leased 26,300 square foot space in Motherwell, UK, with the lease expiring in February 2029 - The company's headquarters and main operations are located in a leased 26,300 square foot facility in Motherwell, UK, with the lease expiring in February 2029[483] Item 5. Operating and Financial Review and Prospects This section reviews the company's financial performance, highlighting a net loss of £12.2 million in 2024, no revenue, and critical liquidity issues raising substantial doubt about its going concern ability Operating Results For FY2024, the company reported a net loss of £12.2 million, an increase from £5.9 million in 2023, with no revenue, driven by the non-recurrence of a derivative gain and increased administrative expenses Comparison of Operations (£) | | FY 2024 | FY 2023 | Change (£) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | - | - | - | -% | | Research & Development Expenses | 5,367,046 | 7,771,391 | (2,404,345) | (31)% | | Administrative Expenses | 7,400,624 | 6,467,932 | 932,692 | 14% | | Loss from Operations | (12,767,670) | (14,239,323) | 1,471,653 | (10)% | | Change in Fair Value of Derivative Liability | 13,437 | 8,052,581 | (8,039,144) | (100)% | | Net Loss | (12,154,030) | (5,906,953) | (6,247,077) | 106% | - Research and development expenses decreased by 31% in 2024, mainly due to the current phase of unmodified cell therapy programs and a 33% reduction in personnel costs from lower headcount[506][507] - Administrative expenses increased by 14% in 2024, primarily driven by a 201% increase in share-based compensation expense and a 32% rise in legal and professional fees[508] - The significant increase in net loss for 2024 was heavily influenced by the non-recurrence of a large gain on the change in fair value of derivative liability, which was £8.1 million in 2023 compared to only £13,437 in 2024[504][510] Liquidity and Capital Resources As of December 31, 2024, the company's cash decreased to £1.2 million, with net cash used in operations increasing to £12.6 million, raising substantial doubt about its going concern ability as funds are projected to last only until June 2025 Cash and Cash Equivalents | Date | Amount (£) | | :--- | :--- | | Dec 31, 2024 | 1.2 million | | Dec 31, 2023 | 2.5 million | Summary of Cash Flows (£) | Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (12,567,288) | (10,544,870) | | Net Cash Used in Investing Activities | (92,514) | (208,789) | | Net Cash Provided by Financing Activities | 11,464,634 | 8,520,376 | - The company's existing cash of £1.2 million (as of Dec 31, 2024) is insufficient to fund operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[529][531] - As of May 7, 2025, cash on hand was $2.7 million (£2.0 million), which is only expected to fund operations to June 2025[49] - Future funding will be required to advance clinical trials and commercialization efforts, which the company expects to finance through equity offerings, debt, and collaborations[534][543] Critical Accounting Estimates Critical accounting estimates include the evaluation of the company's going concern ability, requiring assessment of future funding, and the valuation of derivative liabilities, which can introduce volatility to financial statements - The evaluation of the company's ability to continue as a going concern is a critical accounting estimate, requiring management to assess future funding probabilities and operational cash needs[552] - The valuation of derivative liabilities, particularly warrants that do not meet equity classification criteria, is another critical estimate, impacting the statement of operations as they are re-measured at fair value each period[555] Item 6. Directors, Senior Management and Employees This section outlines the company's four-member board, including CEO Bryan Kobel, aggregate compensation of £1.0 million for FY2024, equity compensation plans, and a workforce of 39 employees, predominantly in R&D Directors and Senior Management As of December 31, 2024, the company's leadership comprises CEO Bryan Kobel, CFO Martin Thorp, and non-executive directors Arlene Morris and James Culverwell, with no family relationships among them Executive Officers and Directors (as of Dec 31, 2024) | Name | Age | Position | | :--- | :--- | :--- | | Bryan Kobel | 45 | Chief Executive Officer and Director | | Martin Thorp | 72 | Chief Financial Officer and Director | | Arlene Morris | 73 | Chair and Director (Non-executive) | | James Culverwell | 68 | Director (Non-executive) | Compensation Total compensation for directors and senior management in FY2024 was £1.0 million, with options held for 15,904,960 ordinary shares, utilizing the 2014 and 2021 Share Option Schemes - Aggregate compensation for directors and senior management for the year ended December 31, 2024, was £1.0 million[564] - As of December 31, 2024, directors and senior management held options to purchase 15,904,960 ordinary shares[564] - The company has two main equity incentive plans: the 2014 Share Option Scheme and the 2021 Share Option Scheme, which are used to grant options to directors, employees, and consultants[567][568][581] Board Practices The four-member board includes two independent directors, with James Culverwell designated as the audit committee financial expert, and operates with Audit and Remuneration Committees, benefiting from foreign private issuer exemptions - The board consists of four members, with two members (James Culverwell and Arlene Morris) determined to be independent[601] - The board has two standing committees: an Audit Committee and a Remuneration Committee, both composed of independent directors[603] - James Culverwell serves as the chair of the Audit Committee and is considered an "audit committee financial expert"[604] Employees As of December 31, 2024, the company employed 39 full-time equivalent staff, with 34 dedicated to research and development functions - As of December 31, 2024, the company had 39 full-time equivalent employees[612] - Of the 39 employees, 34 are in research and development, 3 are in other key functions, and 2 are members of the executive team[612] Item 7. Major Shareholders and Related Party Transactions This section outlines the company's ownership, with Manford Financial Limited holding 10%, and details numerous related party transactions since January 2023, including securities agreements and a significant consulting contract with a principal owner Major Shareholders As of May 7, 2025, Manford Financial Limited is the sole major shareholder with 10% ownership, while directors and officers collectively hold 0.19%, with an estimated 99% of shares held in the United States Beneficial Ownership as of May 7, 2025 | Holder | Percentage Owned | | :--- | :--- | | Manford Financial Limited | 10% | | All directors and officers as a group | 0.19% | - Approximately 99% of the company's outstanding ordinary shares (including those underlying ADSs) were estimated to be held in the United States as of May 7, 2025[618] Related Party Transactions Since January 2023, the company engaged in significant related party transactions, including securities agreements, CEO Bryan Kobel's pension conversion into shares, and a $3 million consulting agreement with a principal shareholder's firm - The company entered into multiple securities purchase agreements, warrant amendments, and inducement agreements with investors throughout 2023 and 2024[622][625][626] - In March 2024, CEO Bryan Kobel converted accrued pension benefits into 476,153 ordinary shares and received a grant of options to purchase 153,000 ADSs[631][632] - In August 2024, the company entered into a $3 million consulting agreement for investor relations with MavDB Consulting LLC, which is wholly owned by David Joshua Bartch, a principal owner of the company during that period[633] Item 8. Financial Information This section refers to consolidated financial statements in Item 18 and outlines the company's dividend policy of no current or anticipated payments, with all earnings retained for business development, subject to Scottish law on distributable reserves - The company has never paid a dividend and does not anticipate paying dividends in the foreseeable future, intending to retain all earnings for business development[634] - Under Scottish law, dividends can only be paid from sufficient distributable reserves, defined as accumulated realized profits less accumulated realized losses[635] Item 9. The Offer and Listing The company's ADSs and public Warrants were listed on Nasdaq from February 2022 to March 2025, subsequently transitioning to OTC Markets under symbols "TCBPY" and "TCBPWF" - The company's ADSs and public Warrants were listed on the Nasdaq Capital Market under symbols "TCBP" and "TCBPW" from February 2022 to March 2025[637] - Since March 24, 2025, the ADSs and public Warrants have been listed on the OTC Markets under symbols "TCBPY" and "TCBPWF"[637][640] Item 10. Additional Information This section details the company's corporate structure, securities, and regulations, summarizing articles of association provisions and outlining U.S. and U.K. tax considerations for U.S. holders, particularly the PFIC risk Memorandum and Articles of Association The company's articles of association, governed by Scottish law, detail corporate governance, including shareholder voting rights, board authority to allot shares, and the company's exemption from the UK City Code on Takeovers and Mergers - Shareholders have one vote per share on a poll at general meetings, and a quorum for a general meeting is two shareholders present in person or by proxy[648][673] - The board of directors may allot shares and shareholder pre-emption rights have been disapplied by a special resolution passed on January 14, 2022, which is effective for up to five years[657][658] - The number of directors shall be not less than two and no more than eleven, and directors can be appointed by ordinary resolution of shareholders or by the board to fill a vacancy[661][662] - The company is not currently subject to the UK City Code on Takeovers and Mergers because its place of central management and control is deemed to be outside the UK, meaning shareholders do not have protections like mandatory bid rules[681][684] Taxation This subsection details U.S. and U.K. tax implications for U.S. Holders, emphasizing the potential Passive Foreign Investment Company (PFIC) classification risk and outlining U.K. tax treatment for non-residents, including potential stamp duty reserve tax (SDRT) on share issuance - A significant U.S. federal income tax risk for U.S. Holders is the potential classification of the company as a Passive Foreign Investment Company (PFIC), which could lead to adverse tax consequences[773][838] - The company does not believe it was a PFIC for 2020 and does not expect to be for 2021, but this is an annual determination and cannot be guaranteed[839] - Dividends paid to U.S. Holders are generally expected to be taxed at the lower qualified dividend rate, provided the company is not a PFIC and is considered a "qualified foreign corporation"[842][844] - For U.K. tax purposes, non-resident holders are generally not subject to U.K. tax on dividends or capital gains from the disposal of shares[864][867] - The issuance or transfer of ordinary shares to a clearance service like DTC could be subject to a 1.5% U.K. stamp duty or SDRT, although current HMRC practice may not enforce this on new capital issues[872][873] Item 11. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks including credit, liquidity, and currency fluctuations, managing them through prudent banking, continuous cash flow monitoring, and acknowledging exposure to U.S. Dollar and Euro transactions against its Pound Sterling reporting currency - The company faces credit risk from deposits with financial institutions and receivables from customers, which it mitigates by using highly-rated banks and assessing partner creditworthiness[883][884] - Liquidity risk is a key concern, managed by monitoring cash flows and maintaining reserves, as the company depends on shareholder funds, collaborations, and grants for working capital[887][888] - The company is exposed to currency risk from transactions in U.S. Dollars and Euros, as its reporting currency is the pound sterling[892] Item 12. Description of Securities Other than Equity Securities This section describes non-equity securities, primarily referencing public and private warrants and American Depositary Shares (ADSs) detailed in Item 10.B, noting varying exercise terms and expiration dates for different warrant series - The company has public warrants that are exercisable for six years from the date of issuance with an exercise price of $100,000 per ADS, subject to adjustments[766][768] - Multiple series of private warrants (Series A, B, F, G, H) are outstanding with varying exercise prices and expiration dates, generally featuring cashless exercise provisions and fundamental transaction protections[776][784][792] - A detailed description of the American Depositary Shares (ADSs) is provided in Item 10.B[895] PART II Item 15. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 31, 2024, due to material weaknesses in accounting for complex financial instruments and property leases, with remediation efforts underway - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were not effective at a reasonable assurance level[899] - The ineffectiveness was due to material weaknesses in internal control over financial reporting related to the accounting for complex financial instruments and property leases[904] - The company has implemented remedial measures, including engaging third-party technical accounting experts, to address the identified material weaknesses[904] - As an emerging growth company, this report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting[902] Item 16. A-K This section details governance, including James Culverwell as audit committee financial expert, the Code of Ethics, principal accountant fees to Marcum LLP, the engagement of CBIZ CPAs P.C. as new auditor, and the company's evolving cybersecurity risk management strategy - The board has determined that James Culverwell is an "audit committee financial expert"[906] Principal Accountant Fees (Marcum LLP) | Year | Audit Fees (£) | | :--- | :--- | | 2024 | 459,843 | | 2023 | 459,511 | - On May 7, 2025, the company engaged CBIZ CPAs P.C. as its new independent registered public accounting firm, following CBIZ's acquisition of the attest business of the previous auditor, Marcum LLP[914] - The company is developing a formal cybersecurity risk management process and has not encountered any cybersecurity incidents that have materially impacted the business[925][928] PART III Item 18. Financial Statements This section presents consolidated financial statements for 2022-2024, prepared under U.S. GAAP, with the auditor expressing substantial doubt about the company's going concern ability due to significant losses and the need for additional funding - The independent auditor's report expresses substantial doubt about the Company's ability to continue as a going concern, citing significant losses and the need to raise additional funds[946] Consolidated Balance Sheet Data (as of Dec 31) | Account (£) | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 1,215,640 | 2,462,609 | | Total assets | 8,328,537 | 8,931,664 | | Total liabilities | 5,318,914 | 6,246,434 | | Accumulated deficit | (52,559,029) | (40,404,999) | | Total shareholders' equity | 3,009,623 | 2,685,230 | Consolidated Statement of Operations Data (Year Ended Dec 31) | Account (£) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenue | - | - | 3,844,532 | | Total operating expenses | 12,767,670 | 14,239,323 | 15,928,529 | | Net loss | (12,154,030) | (5,906,953) | (1,313,601) | | Basic and diluted net loss per share | (0.03) | (0.96) | (1.91) | - The company's existing cash of £1.2 million as of December 31, 2024, is not sufficient to fund operations for 12 months from the issuance of the financial statements, with funds expected to last only until June 2025[997][998]