BenevolentAI: Interim Results for the Six Months Ended 30 June 2023

Delivering on our strategic plan

Merck collaboration, lead asset enters clinic, Knowledge tools in user testing and leadership changes

LONDON–(BUSINESS WIRE)–Regulatory News:

BenevolentAI (Euronext Amsterdam: BAI) (“BenevolentAI” or the “Company” or the “Group”), a leader in applying advanced AI to accelerate biopharma drug discovery, announces its unaudited interim results for the six months ended 30 June 2023.

Dr. François Nader, Chair and Acting CEO of BenevolentAI, said:

“Since the Strategic Review in May we have made significant progress in executing our strategic plan including signing our new collaboration with Merck yesterday. We have also progressed our lead asset into the clinic and our knowledge exploration tools have moved into an evaluation stage with potential customers. We committed in May to right-sizing the business which has resulted in an extension of our cash runway to at least mid-2025.

“All of this would not have been possible if it had not been for the hard work and dedication of all those at Benevolent AI. In particular, I want to thank Joanna for her commitment over the last five years to build the business into what it is today. We wish her all the very best in her future endeavours. With assuming the role of acting CEO today, I commit to building upon these foundations as we continue to grow the business to maximise the potential that our advanced AI platform has to offer. I am also pleased that we have been able to attract to the Company a strategic Chief Financial Officer and an experienced Chief Revenue Officer who will focus on revenue growth opportunities.

“In this Interim statement we provide an update on the evolution of the business, where we highlight how the Benevolent Platform™ drives three revenue streams; End-to-End discovery collaborations, Clinical and preclinical pipeline and Knowledge Exploration Tools. With the investment we have made in our platform over many years, combined with the acceleration in interest in the AI field by Biopharma companies, I believe we are at an inflection point in the adoption of AI in research and drug discovery and we are well placed to benefit from this. Success will not only enable us to deliver significant financial returns for shareholders but also, most importantly, to deliver on our mission of bringing life-changing medicines to patients.”

Operational Highlights (including post period)

Corporate and organisation development: Leadership team changes

• As announced separately, today, BAI chair, Dr. François Nader assumes the role of Acting CEO and Joanna Shields has stepped down as CEO to pursue other endeavours. Joanna will remain a strategic advisor to the Company. A search for a successor has commenced.
• In early September, Catherine Isted was appointed Chief Financial Officer. Catherine is an experienced strategic finance professional and chartered accountant with over 25 years within the life sciences industry.
• Christina Busmalis was appointed Chief Revenue Officer. Christina will have responsibility for leveraging BenevolentAI’s Platform™ to maximise revenue generation, including partnerships, business development and our tech suite products go-to-market strategies.
• In May, Marcello Damiani was appointed to the Board as an Independent Non-Executive Director, and in June, Dr. Jackie Hunter retired from the Board as a Non-Executive Director.

End-to-end drug discovery offerings: Collaborations gather momentum

Merck: New strategic collaboration

• In September, a collaboration with Merck, was signed to deliver novel drug candidates, initially for three targets in oncology, neurology and immunology.
• The agreement includes payments to BenevolentAI of up to $594 million, consisting of a low double-digit million dollar upfront payment on signing and then discovery, development and commercial milestones. Tiered royalties will also be payable on net sales of any commercialised products.

AstraZeneca: Continues to progress

• In May, AstraZeneca presented new preclinical data on an AI-generated target in idiopathic pulmonary fibrosis (IPF) identified in our collaboration at the ATS International Conference 2023 providing information on the biological validation of Serum Response Factor as a potential target for IPF.
• AstraZeneca is now progressing four of the most promising targets out of the five initially selected into the AstraZeneca portfolio in chronic kidney disease (CKD) and IPF.
• In addition, good progress is being made toward further target selection in Heart Failure and Systemic Lupus Erythematosus(SLS) use cases following the extension in January 2022 of the collaboration for a further 3 years to include these indications.
• Each novel target selected by AstraZeneca has the potential to generate significant milestones and royalties for BenevolentAI.

Clinical and preclinical pipeline: Lead asset enters the clinic

• Following a strategic review of the pipeline, in May, the Company confirmed five of the Group’s most advanced and high-potential clinical and preclinical assets are being progressed to their next inflection points.
• In August, BEN-8744, an oral phosphodiesterase 10 (PDE10) inhibitor for the treatment of ulcerative colitis (UC) initiated a Phase I clinical study with topline data readout expected Q1 2024.
• In June, the Company announced that preclinical candidate BEN-34712, an oral, potent and selective brain penetrant RARɑβ (retinoic acid receptor alpha beta) based agonist, for the treatment of amyotrophic lateral sclerosis (ALS) will progress into investigational new drug (IND)-enabling studies.
• BEN-28010, a CHK1 inhibitor for Glioblastoma Multiforme (GBM) and metastatic brain tumours, remains on track and is expected to be IND-ready by Q4 2023.
• As announced in May, the Company confirmed there would be no further investment in the BEN-2293 asset following its Phase IIa study results in April earlier in the year.

Knowledge exploration products: Evaluation with potential customers underway

• New AI product suite enables scientists to make higher-confidence decisions and improve R&D productivity.
• Initial product development substantially completed.
• User testing underway including with potential customers and partners.

Financial Highlights: Cash runway extends to at least Mid 2025

• Revenue increase of 9% from £4.8 million (H1 2022) to £5.3 million driven by extended AstraZeneca collaboration.
• Normalised research and development spend reduction of 5% from £34.7 million (H1 2022) to £33.0 million, reflecting continued investment in the pipeline and innovation of the Benevolent Platform™.
• Normalised operating loss reduction of 21% from £51.4 million (H1 2022) to £40.6 million.
• Operating cash flow before changes in working capital reduced by 22% from £48.4 million (H1 2022) to £37.9 million.
• Cash, cash equivalent, and short-term deposits reduced by 35% from £130.2 million (FY 2022) to £84.3 million with the cash runway extended to at least Mid 2025.

Analyst and Investor briefing

Management will host an analyst briefing at 9.00 am this morning, 21 September 2023, 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 BenevolentAI@fticonsulting.com.

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

About BenevolentAI

BenevolentAI (AMS: BAI) is a leading, clinical-stage AI-enabled drug discovery and development company listed on the Euronext Amsterdam stock exchange. Through the combined capabilities of this AI platform, its scientific expertise, and wet-lab facilities, BenevolentAI is well-positioned to deliver novel drug candidates with a higher probability of clinical success than those developed using traditional methods. The Benevolent Platform™ powers the Company’s in-house drug pipeline and supports successful collaborations with AstraZeneca, as well as leading research and charitable institutions.

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.

OVERVIEW

2023 has been a challenging period for BenevolentAI but since announcing the new strategic plan in May, the Company has achieved a number of key milestones and started to gain momentum to drive forward the growth strategy.

To help investors better understand how the Group monetises the BenevolentAI platform the business has defined the three pillars that will drive revenue and growth.

The end-to-end drug discovery offering allows partners to utilise the Group’s capabilities and Platform to enable novel discoveries throughout the drug discovery process. In the year to date as well as good progress being made with the Company’s collaboration with AstraZeneca, a new strategic collaboration was recently signed with Merck.

The second pillar is the clinical and preclinical pipeline. While there was disappointment earlier in the year with the decision not to proceed with BEN-2293 in Atopic Dermatitis, following the pipeline review the Company has prioritised five key pipeline assets and commenced a Phase I trial for BEN-8744 for the treatment of Ulcerative Colitis (UC).

The third pillar, knowledge exploration, adds a new expansion opportunity through a suite of knowledge exploration tools that enables scientists to make higher-confidence decisions and improve R&D productivity.

With the appointment of the Company’s new Chief Revenue Officer driving revenue generation, alongside the appointment of the new Chief Financial Officer, the Group looks forward to the future and realising the full potential of the Platform, pipeline and AI-tools and delivering a return to shareholders.

OPERATIONAL REVIEW

Corporate and organisation developments

During the first six months of the year and post-period end, there have been significant changes within the Board of Directors and the Executive Leadership Team. As announced separately, today, Joanna Shields has stepped down as Chief Executive Officer and Executive Board member and Dr. François Nader, Chair of the Board of Directors assumes the role of Chair and Acting CEO. A search has been initiated for a new CEO.

In early September, Catherine Isted was appointed Chief Financial Officer and later in September, Christina Busmalis was appointed Chief Revenue Officer, highlighting the Company’s commitment to drive revenue growth as it continues to expand its presence in the market.

Additionally, in June, Dr. Jackie Hunter retired from the Board as a Non-Executive Director and in May the Company welcomed Marcello Damiani as a new Independent Non-Executive Director.

End-to-end drug discovery offerings

End-to-end collaborations utilise the Group’s capabilities and the Benevolent Platform™ enables novel discoveries throughout the drug discovery process. The Group receives upfront payments, milestones, and royalties from collaborations. In the year to date as well as good progress being made with the Group’s collaboration with AstraZeneca, a new strategic collaboration was signed with Merck.

Merck: New strategic collaboration

In September, a new collaboration with Merck was signed utilising BenevolentAI’s end-to-end platform capabilities to deliver novel drug candidates, initially for three targets in oncology, neurology and immunology.

The Company will identify and develop innovative compounds, through Hit Identification to preclinical stage. The agreement includes payments to BenevolentAI of up to $594 million, consisting of a low double-digit million-dollar upfront payment sum on signing and then potentially discovery, development and commercial milestones. Tiered royalties will also be payable on net sales of any commercialised products.

AstraZeneca: Continues to progress

The collaboration continues to progress successfully and in May, AstraZeneca presented new preclinical data at the ATS International Conference 2023 on an AI-generated target in IPF identified in our collaboration and provided information on the biological validation of Serum Response Factor as a potential target for IPF. AstraZeneca is now progressing four of the most promising targets out of the five initially selected into the AstraZeneca portfolio in CKD and IPF. In addition, good progress is being made toward further target sections in Heart Failure and SLE use cases following the extension in January 2022 for a further three years to include these target indications. Each novel target selected by AstraZeneca has the potential to generate significant milestones and royalties for BenevolentAI.

Clinical and preclinical Pipeline

In April, the Company announced top-line Phase IIa study results for its topical pan-Trk inhibitor, BEN-2293, in mild-to-moderate dermatitis. The study successfully met its primary endpoint with BEN-2293 found to be safe and well tolerated. Secondary efficacy endpoints, to reduce itch and inflammation, were not achieved. Subsequently, in May the Company confirmed there would be no additional spend on this asset.

Following a strategic review of the pipeline, in May the Company confirmed that five of the Group’s most advanced and high-potential clinical and preclinical assets are being progressed to their next inflection point. In excess of ten programmes have been paused and the Company makes regular re-evaluation of these programmes as well as assessing potential new portfolio entries.

In August, the Group initiated a Phase I study in its lead asset, BEN-8744, an oral phosphodiesterase 10 (PDE10) inhibitor intended for the treatment of UC. 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. The topline data readout from this study is expected in Q1 2024.

BEN-28010 is on track, progressing and is expected to be investigational new drug (IND) ready by Q4 2023. BEN-28010 is an oral brain penetrant CHK1 inhibitor under development as a potential first-in-class CNS penetrant drug for Glioblastoma Multiforme (GBM) and metastatic brain tumours with the potential for meaningful differentiation in efficacy in patients resistant to chemotherapeutic standard of care agents and the potential to be used in combination therapy approaches.

In June, the Company announced the progression of BEN-34712 a preclinical candidate for the potential treatment of amyotrophic lateral sclerosis (ALS) into IND-enabling studies. BEN-34712 is an oral, potent and selective brain penetrant RARɑβ (retinoic acid receptor alpha beta) biased agonist under development as a potential best-in-class treatment for ALS. BEN-34712 is expected to be IND-ready by Q2 2024.

The Group also has two earlier-stage prioritised assets in Parkinson’s disease and fibrosis (neurodegenerative and immunological diseases) which are currently in chemistry lead optimisation stage. The Parkinson’s disease asset is a potential first-in-class CNS penetrant drug with neuroprotective activity and the fibrosis asset is a novel target focused on the underlying mechanisms of fibrotic diseases.

Knowledge Exploration

We have over five years of experience building highly specific, biopharma sector and domain-specific large language models and AI models for use across research. The new products expand on existing company technologies. Accumulated investment in the BenevolentAI Platform™ enables development of our new products. The newly appointed Chief Revenue Officer is responsible for developing and driving the go-to-markets strategies.

Our new product suite enables scientists to make higher-confidence decisions and improve R&D productivity. The two key products are BenAI-Q and BenAI Research Assistant.

• BenAI-Q: Investigates multi-modal data, performs analytics and instructs tools to surface insights receiving scientific recommendations using natural language in a chat interface
• BenAI Research Assistant: Speeds up reading and reviewing literature facilitating a greater depth of understanding through a web browser extension

User testing is currently underway with potential customers and partners.

Right-sizing the business

The action taken by the Company, announced in May has successfully resulted in reducing the Group’s cash burn by around 40%, extending the cash runway to at least mid-2025, before taking into consideration any unsigned revenue from out-licensing assets, end-to-end collaborations or knowledge exploration products.

The Group’s headcount has reduced by circa. 30%, with around 260 employees by year end including headcount retained for the Merck Collaboration, rightsizing the business while preserving key skills, expertise and capabilities.

Outlook

We will continue to leverage the Benevolent Platform™ to drive our three pillars of revenue; End-to-end discovery collaborations, clinical and preclinical pipeline and knowledge exploration tools. With the investment we have made in our platform over the last few years combined with the acceleration in interest in the field by Biopharma companies, the Group believes we are at an inflection point in the adoption of AI in research and drug discovery and that BenevolentAI is well placed to benefit from this.

Our priorities within the clinical and preclinical pipeline, are the funding of the Phase I study for BEN-8744 that started in August, with the top line data readout expected in Q1 2024. The Group is also funding BEN-28010 IND enabling work in GBM that is expected to be IND ready by Q4 2023 and for BEN-34712 IND enabling work in ALS, due to complete in Q2 2024. We will also further invest to enhance the Benevolent Platform™ and invest in our Knowledge Exploration tools and progress our go-to-market plan.

Additionally, we look forward to providing updates on our Biopharma collaborations.

Dr. François Nader

Chairman and Acting CEO

FINANCIAL REVIEW

Revenues

The Group’s revenues for the first half of 2023 have increased by 9% from £4.8 million (H1 2022) to £5.3 million, reflecting the ongoing second AI-enabled drug discovery collaboration with AstraZeneca which started in January 2022.

Alternative performance measures and normalised presentation

The normalised presentation of the Group’s performance can be found in the interim condensed consolidated statement of comprehensive income and is explained further in note 2.3 of the financial statements.

Research and development (R&D) expenses

Normalised spend in research and development for the first half of 2023 has decreased by 5% from £34.7 million (H1 2022) to £33.0 million, primarily driven by a reduction in share-based payment expenses under the BenevolentAI Equity Incentive Scheme (“BEIS”).

Normalised spend in research and development, excluding share-based payments, for the first half of 2023 has increased 5% from £30.0 million (H1 2022) to £31.5 million, driven by the BenevolentAI pipeline advancing into later stages of development, in particular BEN-8744 and its preparation for the Phase I trial in H2 2023, combined with an increase in staff related costs supporting the continued innovation of the Benevolent Platform™.

The Group also has costs relating to BEN-2293 which, as communicated in May 2023, will not be subject to further investment following the Phase IIa trial results.

Reported spend in research and development increased by 7% from £34.7 million (H2 2022) to £37.0 million due to £4.1 million of restructuring programme expenses not present in the first half of 2022, largely offset by a reduction in share-based payment expenses from H1 2022.

General and administrative costs

Normalised business operations spend for the first half of 2023 has significantly reduced by 40% from £21.7 million (H1 2022) to £13.0 million, primarily driven by a reduction in share-based payment expenses under the BEIS.

Normalised business operations spend, excluding share-based payments, has significantly increased by 82% from £6.5 million (H1 2022) to £11.9 million, primarily driven by fluctuations in exchange rates leading to significant unrealised gains in the first half of 2022 not replicated in the current period.

Removing the impact of unrealised foreign exchange gains/losses, the spend for the first half of 2023 increased by 19% from £9.7 million (H1 2022) to £11.5 million, reflecting a full six months of additional costs from being in a listed environment, as compared to the two months of listing status in H1 2022.

Reported administrative spend for the first half of 2023 has significantly decreased by 89% from £123.6 million (H1 2022) to £14.2 million, with £1.2 million in expected restructuring programme expenses more than offset by £101.

Contacts

Enquiries:
Investors:
Fleur Wood – VP Investor Relations

fleur.wood@benevolent.ai
investors@benevolent.ai
+44(0) 203 781 9360

Media:
Rajin Kang – VP Communications

rajin.kang@benevolent.ai
+44(0) 203 781 9360

FTI Consulting:
Ben Atwell/Simon Conway/Victoria Foster Mitchell

+44 203 727 1000

BenevolentAI@fticonsulting.com

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