BenevolentAI Unaudited Preliminary Results for the Year Ended 31 December 2023

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Focused on delivering cutting edge AI-driven drug discovery

LONDON–(BUSINESS WIRE)–Regulatory News:

BenevolentAI (“BenevolentAI”, “the Company” or “the Group”) (Euronext Amsterdam: BAI), a leader in applying advanced AI to accelerate biopharma drug discovery, today announces its unaudited preliminary results for the twelve months ended 31 December 2023.

Dr. Joerg Moeller, Chief Executive Officer (CEO) of BenevolentAI, said:

“I am delighted to present my inaugural set of financial results as the CEO of BenevolentAI. We have made significant operational progress despite a challenging first half of 2023. Particularly noteworthy achievements include the signing of a significant collaboration with Merck, the completion of pre-clinical development of our glioblastoma multiforme asset, and also the initiation, and near completion, of a Phase Ia study of our lead asset in ulcerative colitis. During the year, we also invested to further enhance the Benevolent Platform™ and will continue to leverage it to deliver on our patient-centric revenue generation strategy.

“Our mission is focused on bringing life-changing medicines to patients and during my brief tenure at BenevolentAI I have been inspired by our team’s talent and commitment to realise this. I look forward to working closely with them, and our partners, to make a lasting impact on the lives of patients worldwide.”

- A message from our partner -

Operational highlights: Signed major deal with Pharma partner and progressed own pipeline assets

  • New strategic collaboration signed with Merck KGaA. The agreement includes payments to BenevolentAI of up to $594 million to deliver novel drug candidates against, initially, three targets in oncology, neurology and immunology. In addition to a low double-digit million-dollar upfront payment, BenevolentAI could potentially receive payments on development and commercial milestones as well as tiered royalties on net sales.
  • Lead asset for the treatment of ulcerative colitis (UC) progressed into the clinic. As expected, during the year, the Company initiated a Phase Ia clinical study for BEN-8744, an oral phosphodiesterase 10 (PDE10) inhibitor, with topline data readout expected Q1 2024.
  • Successfully progressed glioblastoma multiforme (GBM) asset to IND-ready status. BEN-28010 is an oral brain-penetrant CHK1 inhibitor for the treatment of GBM and metastatic brain tumours which completed regulatory IND-enabling studies during the year to plan.
  • IND-enabling studies ongoing for amyotrophic lateral sclerosis (ALS) asset. BEN-34172 is an oral, potent and selective brain-penetrant RARɑβ (retinoic acid receptor alpha beta) selective agonist. Drug substance manufacturing scale-up was completed during the period and is expected to be IND ready by mid-2024.
  • No further investment in BEN-2293 for atopic dermatitis (AD). As announced in May, the Company confirmed there will be no further investment in BEN-2293 following its Phase IIa study results in AD earlier in the year, where the safety and tolerability primary endpoints were successfully met but the efficacy secondary endpoints were not.
  • Completed strategic review. During the period, the Company completed a strategic review of operations to focus the business on its drug discovery collaborations and five high potential assets in its proprietary pipeline as well as exploring a new expansion opportunity in Knowledge Exploration tools.
  • Knowledge Exploration tools assessment nearing completion. During the year initial product development was substantially completed alongside user testing. Current market assessment is underway with results expected in early Q2 2024 and will determine if or how this opportunity fits into the wider commercial strategy for the Company.
  • Further enhancement and investment in the Benevolent Platform in key areas. Work continues to expand the capabilities, offerings and prediction methodology of the platform to further assist both our collaboration partners and our own internal drug programmes.

Corporate highlights (including post period): Continued to strengthen the Board and Leadership team

  • Appointed accomplished R&D leader, Dr. Joerg Moeller as CEO and Executive Director, post period, in January 2024. Following the resignation of Joanna Shields as CEO and Executive Director in September 2023, Dr. François Nader, Chair of the Board, temporarily assumed the additional role of Acting CEO from September 2023 until January 2024.
  • Significant appointments to the Leadership team. In September, the Company appointed Catherine Isted as Chief Financial Officer and Christina Busmalis as Chief Revenue Officer.
  • Further strengthening of the Board. Marcello Damiani was also appointed as an Independent Non-Executive Director during the year.

2023 financial highlights

  • Revenue decreased to £7.3 million (2022: £10.6 million) primarily reflecting decreased revenues from the AstraZeneca collaboration partly offset by the new Merck collaboration.
  • Normalised1 research and development (“R&D”) spend, excluding share-based payments (“SBP”), of £56.5 million (2022: £65.1 million); reported R&D spend excluding SBP of £60.3 million (2022: £65.1 million).
  • Normalised1 operating loss of £72.7 million (2022: £94.6 million).
  • Reported operating loss of £77.6 million (2022: £197.0 million).
  • Cash, cash equivalents and short-term deposits position of £72.9 million at 31 December 2023 (31 December 2022: £130.2 million), compared with £84.3 million at 30 June 2023.
  • Operating cash outflow before changes to working capital of £54.6 million (2022: £67.8 million).
  • Post the strategic review, cash burn reduced by around 40% compared to pre-restructuring forecasts with the Cash runway extended to at least mid-2025.

Twelve months ended

31 December 2023

 

 

2023

2022

 

 

£’000

£’000

% Change

 

Revenue

7,331

10,560

-31%

Normalised1 research and development spend2

(56,909)

(71,884)

-21%

Normalised1 administrative expenses2

(23,496)

(33,440)

-30%

 

Normalised1 operating loss

(72,651)

(94,598)

-23%

Normalised1 basic and diluted EPS, expressed in pence

(49.1p)

(72.6p)

-32%

 

Reported operating loss

(77,573)

(197,034)

-61%

Reported basic and diluted EPS, expressed in pence

(53.5p)

(150.2p)

-64%

Cash, cash equivalents and short-term deposits

72,906

130,182

-44%

1

Normalised operating loss for the years ended 31 December 2023 and 31 December 2022 is defined as operating loss excluding non-normalised transactions, defined as those related to the restructuring programme undertaken following the strategic plan announced on 25 May 2023; those related to the Transaction; the revaluation of investments which BAI does not control directly; and the revaluation of the warrants recognised as finance income. See note 2.4 under “UNAUDITED NOTES TO THE FINANCIAL INFORMATION” for more information.

2

Including employee-related SBP expenses

Analyst and Investor briefing

Management will host an analyst briefing at 13.00 GMT/08.00 ET this afternoon, 14 March 2024, at the offices of FTI Consulting (200 Aldersgate, Aldersgate Street, London, EC1A 4HD, United Kingdom). To register your interest in attending either in person or virtually, analysts should contact FTI Consulting at [email protected].

A recording of the webcast will be made available in the investor section of the Company’s website shortly afterwards.

About BenevolentAI

At BenevolentAI (AMS: BAI), we serve patients by leveraging our proprietary and validated Benevolent PlatformTM that integrates AI and science to uncover new biology, predict novel targets and develop first-in-class or best-in-class drugs for complex diseases. By applying proprietary advanced AI tools, in combination with in-house scientific expertise and wet-lab facilities, BenevolentAI is well-positioned to identify and accelerate novel drug discovery. The Company’s business model presents multiple routes for value creation including discovery collaborations with pharma companies like AstraZeneca and Merck, advancing in-house pipelines to inflection points, and commercialising a suite of knowledge exploration tools. Headquartered in London, with wet labs in Cambridge (UK) and an office in New York, BenevolentAI is at the forefront of reshaping the future of drug discovery and delivering innovative medicines.

Forward-looking Statements

This release may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “plans”, “targets”, “aims”, “believes”, “expects”, “anticipates”, “intends”, “estimates”, “will”, “may”, “should” and similar expressions. Forward-looking statements include statements regarding objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; economic outlook and industry trends; developments in BenevolentAI’s markets; the impact of regulatory initiatives; and/or the strength of BenevolentAI’s competitors. These forward-looking statements reflect, at the time made, BenevolentAI’s beliefs, intentions and current targets/aims. Forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this release are based upon various assumptions based on, without limitation, management’s examination of historical operating trends, data contained in BenevolentAI’s records, and third-party data. Although BenevolentAI believes these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond BenevolentAI’s control. Forward-looking statements are not guarantees of future performance, and such risks, uncertainties, contingencies and other important factors could cause the actual outcomes and the results of operations, financial condition and liquidity of BenevolentAI or the industry to differ materially from those results expressed or implied by such forward-looking statements. The forward-looking statements speak only as of the date of this release. No representation or warranty is made that any of these forward- looking statements or forecasts will come to pass or that any forecast result will be achieved.

CHAIR’S STATEMENT

A year of transition

Focus on delivering cutting-edge AI driven drug discovery

We have made significant progress in executing our on strategic plan and our revenue generating business model that is driven by the Benevolent PlatformTM, despite 2023 being a challenging year and a transition period for the Company. With continued investment in our platform, we will be able to continue to leverage it to drive and support our revenue pillars, enabling us and our partners to deliver life-changing medicines to patients.

Importantly, in January 2024, we announced the appointment of Dr. Joerg Moeller as our new CEO. Joerg’s experience as an outstanding leader with extensive experience across all stages of R&D and a strong advocate of AI as a driver of discovery innovation and effectiveness will be key as we progress further delivering on our patient-centric revenue generating strategy.

During the period, we strengthened our leadership team with the appointment of Catherine Isted as our Chief Financial Officer and Christina Busmalis as Chief Revenue Officer, a newly created role, as we increased our commercial capabilities to maximise the opportunities derived from the Benevolent PlatformTM.

To ensure that we are efficiently and properly resourced for future growth, we refocused our business following a strategic review in May 2023 that resulted in an extension of our cash runway, improvement of our capital efficiency and operational effectiveness whilst retaining the critical capabilities needed to drive value creation.

Governance and Board

Our Board remains committed to the principles of good corporate governance. As a Luxembourg-registered company that is traded on Euronext Amsterdam, our corporate governance framework is based on applicable Luxembourg laws, the Company’s Articles of Association and its internal regulations, in particular the Rules of the Board. The Company adopted the Quoted Companies Alliance (QCA) Corporate Governance Code 2018 (the “QCA Code”) that provides an appropriate and suitable governance framework for a group of our size and complexity. The application of the QCA Code supports the Company’s long-term success whilst simultaneously managing risks and provides an underlying framework of commitment and transparent communications with stakeholders.

Throughout the year and the beginning of 2024 we made good progress in strengthening our Board, ensuring we are well-positioned to drive the Company through its next phase of growth. On the Board, Jean Raby was appointed as Senior Independent Director, Dr. John Orloff as Workforce NED and we welcomed the appointment of Marcello Damiani as an Independent Non-Executive Director. Dr. Jackie Hunter retired from the Board as a Non-Executive Director having served on the Board of the Company and its predecessors since 2016.

After five years as CEO and Executive Director, Joanna Shields stepped down from both roles in September 2023 and I assumed the role of Acting CEO while maintaining my Chair of the Board role and responsibilities in order to provide the Company with continuity whilst the search process was underway. In January 2024, following the appointment of Dr. Joerg Moeller as CEO and Executive Director, I reverted to my position of Independent Non-Executive Chair of the Board.

The Board recognises the benefits that diversity brings and the importance of having a balance of perspectives, insights and challenge. Consequently, the Board approved its Diversity Policy in March 2023. The Board also recognises the importance of providing new Directors with a thorough induction and ensuring that Directors’ skills and knowledge are refreshed and updated regularly, given the dynamic business and regulatory environment in which the Company operates. Consequently, the Board developed a comprehensive induction and annual Board training and development programme during the year.

A formal and rigorous evaluation of the effectiveness of the Board, its committees, the Chair and individual Directors is now undertaken on an annual basis. The 2023 evaluation was internally facilitated and concluded that the Board and its Committees continue to be effective, all Directors continue to make valuable contributions based on experience and knowledge, demonstrate considerable commitment and time to their roles and the Non-Executive Directors provide constructive challenge.

Further information on governance during the year, including ESG, can be found in the Sustainability report and the Governance report.

Building a sustainable business for our employees, partners and patients

At BenevolentAI we serve patients by leveraging our proprietary and validated Benevolent PlatformTM that integrates AI and science to uncover new biology, predict novel targets and develop first-in-class or best-in-class drugs for complex diseases. We are committed to upholding our values and this includes a responsible and sustainable approach to our business and enhancing our platform, advancing our pipeline, supporting our partners, investing in our people and communities and reducing our impact on the planet and governing our operations.

We aim to build and empower a diverse and inclusive workforce to find innovative solutions that benefit our business our partners and the patients we serve. Our goal is to contribute positively to society by pushing the boundaries of technology and science to address significant unmet medical needs by developing new medicines for a broad range of undertreated diseases.

We are proud of the progress we have made this year and remain committed to continuous innovation and excellence in science and technology.

Commitment to deliver on our mission of uniting science and technology to serve patients with complex diseases

With clarity on our strategic focus geared towards value creation and with our revenue pillars providing a business model that is driven by the Benevolent PlatformTM, we have an engaging vision for a successful, sustainable and long-term future for the Company as one of the leaders in AI driven drug discovery. Applying advanced AI to accelerate biopharma drug discovery is increasingly becoming accepted and validated with long-term structural trends supporting its growth and I believe we are well placed to benefit from this trend for future success. As we look forward, we are excited for the opportunity to deliver on our mission of bringing life-changing therapies to patients.

Along with the rest of the Board I am looking forward to working with Dr. Joerg Moeller, our new CEO. Under Joerg’s leadership, our focus will remain on continuing to invest in our platform to leverage revenue generation and commercial focus, improving our operational effectiveness, and fostering a culture of excellence and innovation.

I am grateful to all our stakeholders for their support during this turnaround period for the Company and, along with the rest of the Board and the Leadership Team, remain committed to fulfilling our mission and value creation.

Dr. François Nader

Chair

CHIEF EXECUTIVE’S STATEMENT

I am excited by the opportunity to lead BenevolentAI as its new CEO and, with the opportunities ahead of us, to further capitalise on our platform, pipeline and research capabilities in order to strengthen the Company’s market position with an increased commercial focus. Fostering a culture of excellence, innovation and diversity is something I am passionate about, and since joining the Company I am ever more convinced of the potential of the Benevolent PlatformTM and our AI-enabled drug discovery offerings, pipeline and the potential that we have to drive value creation.

Despite 2023 being a transition period for the Company, BenevolentAI achieved a number of key milestones including a significant collaboration signed with Merck KGaA. With a clear business model and strategic focus to generate revenue and growth driven by the Benevolent PlatformTM, we are well-placed to deliver on our strategic priorities going forward.

Delivering on our strategic plan

Commercial and platform validation:

Signing a new strategic collaboration with Merck KgaA was an important milestone for the Company and one that has significant medium-term revenue potential. This collaboration also provides continued validation both commercially and for our platform and demonstrates the breadth of our end-to-end drug discovery offerings and capabilities. Further collaborations are critical to the future success of the business, and we will look to expand on our current partnerships during the course of the year.

Innovation and further platform validation:

Given my background in R&D and being a strong advocate of the application of AI to drug discovery driving innovation and efficiency, of particular interest is the Company’s lead asset. BEN-8744 is an oral PDE10 inhibitor for the treatment of ulcerative colitis (UC) targeting patients with moderate to severe disease. BEN-8744 progressed into a Phase Ia clinical study in August 2023 and top-line data is expected in Q1 2024.

The success of this asset is particularly important for the Company, as its discovery validates the ability of the Benevolent PlatformTM to identify novel targets for evaluation. By generating hypotheses at the Target Identification stage, the platform identified PDE10 as an entirely novel target for the treatment of UC, with no previously known link established between PDE10 and UC. The target was subsequently validated ex-vivo, with BenevolentAI’s molecular design expertise enabling rapid lead optimisation. BEN-8744 was nominated as a candidate in September 2021, only two years after programme initiation.

The BEN-8744 Phase Ia study is in healthy volunteer safety and tolerability study. This asset has a novel therapeutic approach and is a potential first-in-class peripherally restricted small molecule for the treatment of UC with the potential for meaningful differentiation from existing immunosuppressive standard-of-care treatments, through disease-modifying efficacy. In line with our strategy, it has always been the Company’s intention to out-license or partner this asset with this being done at the optimal value creation inflection point.

Assessing a potential new expansion opportunity:

The expansion opportunity of our new customisable SaaS products and suite of Knowledge Exploration Tools substantially completed initial product development during the year. As with any potential new product launch, it is essential that a thorough and current market assessment is completed for any go-to-market plan to be successful. As such, a market assessment is underway. The results of this will be complete in early Q2 2024 and will determine how this opportunity fits into the wider commercial strategy for the Company.

Outlook

Our priority for 2024 is to focus on delivering cutting edge AI-driven drug discovery capabilities and revenues leveraging the Benevolent PlatformTM. Importantly, we will also strive to increase operational effectiveness and have greater commercial focus whilst prioritising successful delivery of the project plans for our existing strategic collaborations, advance our internal pipeline and generate value creation through an aggressive commercial strategy. While we are currently excited as we wait for the top line data readout of our lead asset BEN-8744 in Q1 2024, we are committed to adding at least one new collaboration, as well as out license at least one of our proprietary assets, during the course of the year. I look forward to leading the Company and working with the excellent team we have here at BenevolentAI to execute on the next stage of growth and value creation for shareholders, whilst delivering on our mission of developing life-changing medicines for patients.

Dr. Joerg Moeller

Chief Executive Officer

OPERATIONAL REVIEW

Overview

During 2023, the Company undertook a strategic review of its operations to right-size the business, focus on its drug discovery collaborations and five high potential assets from its proprietary pipeline, as well as to explore a new expansion opportunity in knowledge exploration tools, all of which are driven from and enabled through th

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