GH Research PLC(GHRS) - 2022 Q2 - Quarterly Report

Unaudited Condensed Consolidated Interim Financial Statements GH Research PLC reported a net loss of $5.4 million for H1 2022, an increase from $3.3 million, driven by higher R&D and G&A expenses, with total assets decreasing Statement of Comprehensive Income For H1 2022, loss from operations widened to $14.8 million due to increased R&D and G&A, partially offset by a $9.3 million FX gain, resulting in a $5.4 million net loss Consolidated Statement of Comprehensive Income (Six Months Ended June 30, in thousands of USD) | Metric | 2022 (USD '000) | 2021 (USD '000) | Change | | :--- | :--- | :--- | :--- | | Research and development | (8,954) | (2,646) | Increased | | General and administration | (5,802) | (1,167) | Increased | | Loss from operations | (14,756) | (3,813) | Widened | | Foreign exchange gain | 9,327 | 544 | Increased | | Profit/(loss) for the period | (5,429) | (3,275) | Widened | | Total comprehensive loss | (14,744) | (3,963) | Widened | | Basic and diluted EPS (USD) | (0.104) | (0.093) | Decreased | - The increase in operating expenses was primarily due to higher external costs for technical development and clinical trials, as well as increased employee expenses from hiring personnel to support expanded clinical activities and growth initiatives[36][37] Statement of Financial Position Total assets decreased to $266.3 million as of June 30, 2022, from $279.9 million at year-end 2021, primarily due to reduced cash, with total equity also declining Financial Position Highlights (in thousands of USD) | Metric | June 30, 2022 (USD '000) | Dec 31, 2021 (USD '000) | | :--- | :--- | :--- | | Cash and cash equivalents | 265,377 | 276,776 | | Total assets | 266,319 | 279,924 | | Total liabilities | 3,095 | 2,749 | | Total equity | 263,224 | 277,175 | Statement of Changes in Equity Total equity decreased by $13.9 million to $263.2 million in H1 2022, primarily due to a $5.4 million net loss and a $9.3 million negative FX translation adjustment Changes in Equity (Six Months Ended June 30, 2022, in thousands of USD) | Item | Amount (USD '000) | | :--- | :--- | | Equity at Jan 1, 2022 | 277,175 | | Loss for the period | (5,429) | | Translation adjustment | (9,315) | | Share-based compensation | 793 | | Equity at June 30, 2022 | 263,224 | Statement of Cash Flows Net cash used in operating activities increased to $11.3 million for H1 2022, with no financing activities, leading to a $11.4 million decrease in cash balance to $265.4 million Cash Flow Summary (Six Months Ended June 30, in thousands of USD) | Metric | 2022 (USD '000) | 2021 (USD '000) | | :--- | :--- | :--- | | Net cash used in operating activities | (11,287) | (2,312) | | Net cash used in investing activities | (34) | (35) | | Net cash flows from financing activities | - | 289,220 | | Net (decrease)/increase in cash | (11,321) | 286,873 | | Cash at the end of the period | 265,377 | 292,625 | Notes to the Financial Statements These notes detail the company's biopharmaceutical focus, IFRS (IAS 34) basis, significant R&D and G&A expense increases, foreign exchange gains, and share-based compensation Note 1: Corporate Information GH Research PLC is a clinical-stage biopharmaceutical company developing 5-MeO-DMT therapies for psychiatric and neurological disorders, initially focusing on TRD with three product candidates - The company is dedicated to transforming the treatment of psychiatric and neurological disorders, with an initial focus on Treatment Resistant Depression (TRD)[7] - The current product portfolio includes GH001 (inhalable 5-MeO-DMT), GH002 (injectable 5-MeO-DMT), and GH003 (intranasal 5-MeO-DMT)[7] Note 2: Basis of Preparation and Accounting Policies Interim financial statements are prepared under IAS 34 in U.S. dollars, adopting a going concern basis with $265.4 million cash, and noting foreign currency translation effects due to differing functional currencies - The financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting"[9] - The board believes the Group has sufficient financial resources, with cash of $265.4 million as of June 30, 2022, to continue as a going concern for at least the next twelve months[15][16] - The functional currency of the parent company is the U.S. dollar, while its subsidiary (GH Research Ireland Limited) uses the euro, resulting in foreign exchange gains/losses upon consolidation, primarily from translating the subsidiary's U.S. dollar cash balance into euro[21][23] Note 3: Expenses by Nature Total operating expenses for H1 2022 were $14.8 million, up from $3.8 million, with R&D increasing to $9.0 million due to clinical trial costs and G&A rising to $5.8 million from increased fees and employee costs Operating Expenses by Nature (Six Months Ended June 30, in thousands of USD) | Expense Category | 2022 (USD '000) | 2021 (USD '000) | | :--- | :--- | :--- | | Research and development | 8,954 | 2,646 | | General and administrative | 5,802 | 1,167 | | Total operating expenses | 14,756 | 3,813 | - The foreign exchange gain of $9.3 million for the six months ended June 30, 2022, primarily consists of gains from the translation of the U.S. dollar cash balance into euro in the accounts of the company's Irish subsidiary[38] Note 4-7: Current Assets, Liabilities, and Contingencies Other current assets primarily include prepayments and VAT receivable, while current liabilities are mainly for manufacturing, research, consulting, and legal fees, with no material contingent liabilities - Other current assets primarily represent prepayments and VAT receivable[40] - Trade payables and other current liabilities are mainly for manufacturing, research, consulting, and legal/professional fees[41][42] - The Group has no material contingencies at the balance sheet date[43] Note 8: Share-Based Compensation The company granted 203,553 share options in H1 2022, bringing total outstanding options to 360,740, with a recognized share-based compensation expense of $0.8 million for the period Share Option Activity (As of June 30, 2022) | Metric | Number of Awards | Weighted Avg. Exercise Price (USD) | | :--- | :--- | :--- | | Outstanding at Dec 31, 2021 | 157,187 | $15.80 | | Granted in H1 2022 | 203,553 | $14.65 | | Outstanding at June 30, 2022 | 360,740 | $15.97 | - The share-based compensation expense recognized was $0.8 million for the six months ended June 30, 2022, compared to only $12 thousand for the same period in 2021[53] Note 9: Related Party Disclosures No material related party transactions occurred during the first six months of 2022 that significantly affected the Group's financial position or performance - No material related party transactions occurred in the three and six months ended June 30, 2022[54] Note 10: Earnings and Loss Per Share Basic and diluted loss per share for H1 2022 was ($0.104), compared to ($0.093) in H1 2021, with Q2 2022 showing a positive EPS of $0.006, and share options excluded from diluted EPS due to anti-dilutive effects Earnings/(Loss) Per Share (USD) | Period | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Three Months Ended June 30 | 0.006 | (0.053) | | Six Months Ended June 30 | (0.104) | (0.093) | - For periods with a net loss, and for the profitable Q2 2022, shares issuable under the Share Option Plan were excluded from the diluted EPS calculation as their effect was anti-dilutive[57][58] Note 11: Events After the Reporting Date No significant events occurred after the June 30, 2022 reporting date requiring disclosure or adjustment in the interim financial statements - No events requiring disclosure occurred after the reporting date[59]