BDRX 20-F Report ended Dec. 31, 2015

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Commission File Number 001-37652

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MIDATECH PHARMA PLC

(Exact name of registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

65 Innovation Drive

Milton Park

Abingdon, Oxfordshire, OX14 4RQ, United Kingdom

(Address of principal executive offices)

James N. Phillips, Chief Executive Officer

65 Innovation Drive

Milton Park

Abingdon, Oxfordshire, OX14 4RQ, United Kingdom

Tel: +44 (0)1235 841 575

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

____________________________________________________________

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the outcome of the Company’s remediation plan and approach to the material weakness in internal control over financial reporting;

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

A.	Selected Financial Data.

Acquisitions of Q Chip Limited and DARA BioSciences, Inc.

On December 8, 2014, Midatech acquired Q Chip Limited, a company incorporated under the laws of England and Wales, subsequently renamed Midatech Pharma (Wales) Limited (“Midatech Wales”). Midatech’s financial and operating data for fiscal 2014 was not adjusted to reflect the full year effect of Midatech’s acquisition of Midatech Wales, whereas statement of financial position data and subsequent periods include contributions from Midatech Wales.

On December 4, 2015, Midatech acquired DARA. Midatech’s financial and operating data for fiscal 2015 and 2014 was not adjusted to reflect the full year effect of Midatech’s acquisition of DARA, whereas statement of financial position data and subsequent periods include contributions from DARA.

Thus Midatech’s financial and operating data are not fully comparable in this annual report.

The following table shows, for the periods indicated, information concerning the exchange rate between the British pound sterling and the U.S. dollar. This information is provided solely for your information, and Midatech does not represent that the British pound sterling could be converted into U.S. dollars at these rates or at any other rate. These rates may differ from the actual rates used in the preparation of the consolidated financial statements included in this annual report and other financial data appearing in this annual report.

Midatech’s ability to successfully market its product portfolio, and to generate revenues or profits from its products, will depend upon successful operation of the shared sales force that Alamo provides under contract. There can be no assurances that the sales representatives will achieve the desired results or that they will be successful in marketing Midatech’s products. Pursuant to the contractual arrangements governing the sales force, Midatech is responsible for significant financial obligations whether or not the sales force achieves the desired results, including fixed monthly fees subject to an annual escalator, reimbursement for certain expenses, implementation fees, and recruiting fees in connection with new hires for the sales force. If the sales force does not effectively market Midatech’s products as desired, Midatech’s financial condition, results of operations and stock price could be materially adversely affected.

The success of any products Midatech may commercialize will depend on the degree of market acceptance by physicians, patients, healthcare payers and others in the medical community.

Any products that Midatech acquires or brings to the market may not gain market acceptance by physicians, patients, healthcare payers and others in the medical community. If these products do not achieve an adequate level of acceptance, Midatech may not generate material product revenues and may not become profitable. The degree of market acceptance of Midatech’s products and product candidates, if approved for commercial sale, will depend on a number of factors, including, but not limited to:

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the prevalence and severity of any side effects;

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the efficacy and potential advantages of alternative treatments;

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price;

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the willingness of physicians to prescribe Midatech’s products; and

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sufficient coverage or reimbursement by the Centers for Medicare and Medicaid Services and third party payers.

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Commission Directive 2003/94/EC of October 8, 2003 enforcing principles and guidelines of good manufacturing practice as they related to medicinal products and investigational medicinal products for human use;

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efforts to develop an international sales, marketing and distribution organization, which may increase Midatech’s expenses, divert management’s attention from the acquisition or development of product candidates or cause it to forgo profitable licensing opportunities in these geographies;

A significant number of Ordinary Shares (in form of Depositary Shares) are issuable pursuant to outstanding options and warrants assumed by Midatech in connection with the acquisition of DARA, and Midatech may sell additional Ordinary Shares in the future. Sales of these shares will dilute the interests of other security holders and may depress the price of the Ordinary Shares and Depositary Shares.

As of December 31, 2015, Midatech had 33,467,504 Ordinary Shares outstanding, of which 4,861,608 Ordinary Shares were represented by 2,430,804 Depositary Shares. As of December 31, 2015, there were 3,034,437 Ordinary Shares issuable upon the exercise of outstanding warrants assumed by Midatech in connection with the acquisition of DARA, with a weighted average exercise price of $9.67 per share, and 721,000 Ordinary Shares issuable upon the exercise of outstanding options assumed by Midatech in connection with the acquisition of DARA, with a weighted average exercise price of $7.62 per share.

In addition to the foregoing, Midatech may issue additional Ordinary Shares (and Depositary Shares underlying such Ordinary Shares), or other securities convertible into Ordinary Shares, from time to time to finance Midatech’s operations. Midatech may also issue additional shares in connection with stock options or restricted stock granted to our employees, officers, directors and consultants under Midatech’s equity compensation plans. The issuance of the securities underlying these instruments, or perception that issuance may occur, will have a dilutive impact on other stockholders and could have a material negative effect on the market price of our Ordinary Shares and Depositary Shares.

Midatech is incorporated as a public limited company in England and Wales and is deemed to be a “foreign private issuer” under the rules and regulations of the SEC. As a foreign private issuer, Midatech is exempt from certain rules under the Exchange Act that would otherwise apply if Midatech were a company incorporated in the United States, including:

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the requirement to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies with securities registered under the Exchange Act;

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the requirement to file financial statements prepared in accordance with GAAP;

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the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations; and

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the requirement to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information.

In addition, Midatech’s officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the related rules with respect to their purchases and sales of Ordinary Shares and Depositary Shares. Accordingly, you may receive less information about Midatech than you would receive about a public company incorporated in the United States and may be afforded less protection under the United States federal securities laws than you would be if Midatech were incorporated in the United States.

Additional reporting requirements may apply if Midatech loses its status as a foreign private issuer.

If Midatech loses its status as a foreign private issuer at some future time, then it will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if it were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.

As a foreign private issuer, Midatech is not required to comply with many of the corporate governance standards of NASDAQ applicable to companies incorporated in the United States.

The Midatech Board of Directors is required to maintain an audit committee comprised solely of three or more directors satisfying the independence standards of NASDAQ applicable to audit committee members. As a foreign private issuer, however, Midatech is not required to comply with most of the other corporate governance rules of NASDAQ, including the requirement to maintain a majority of independent directors, and nominating and compensation committees of its Board of Directors comprised solely of independent directors. Although the AIM Rules and the United Kingdom Corporate Governance Code have comparable requirements, holders of Depositary Shares may not be afforded the benefits of the corporate governance standards of NASDAQ to the same extent applicable to companies incorporated in the United States.

Midatech prepares its financial statements using the British pound sterling as its reporting currency.

Midatech uses the British pound sterling as its financial statement reporting currency. Midatech’s financial results reported in the British pound sterling may differ materially from its results if reported in U.S. dollars due to changes in the exchange rates of the British pound sterling, the U.S. dollar and the currencies of other countries in which Midatech does business. Future changes in currency exchange rates could have a material adverse effect on Midatech’s financial results.

Midatech is an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make its securities less attractive to investors.

Midatech is an “emerging growth company,” as defined under the Jumpstart Our Business Startups Act. Midatech will remain an “emerging growth company” for up to five years; provided, however, that if Midatech’s annual gross revenues exceed $1.0 billion, or its non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of its common shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, Midatech would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, Midatech is not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, it has reduced disclosure obligations, including with regard to its audited financial statements and executive compensation, and it is exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Midatech intends to operate so as to be treated exclusively as a resident of the United Kingdom for tax purposes, but the relevant tax authorities may treat it as also being a resident of another jurisdiction for tax purposes.

Midatech is a public limited company incorporated under the laws of England and Wales. Under current English law, the decisions of the English courts and the published practice of HM Revenue and Customs suggest that Midatech is likely to be regarded as being a United Kingdom resident and should remain so if, as Midatech intends that, (i) all major meetings of its Board of Directors and most routine meetings are held in the United Kingdom with a majority of directors present in the United Kingdom for those meetings; (ii) at those meetings there are full discussions of, and decisions are made regarding, the key strategic issues affecting Midatech and its subsidiaries; (iii) those meetings are properly minuted; (iv) at least some of the directors of Midatech, together with supporting staff, are based in the United Kingdom; and (v) Midatech has permanent staffed office premises in the United Kingdom sufficient to discharge its functions.

Even if Midatech is considered by HM Revenue and Customs as resident in the United Kingdom for United Kingdom tax purposes, as expected, it would nevertheless not be treated as resident in the United Kingdom if (a) it were concurrently resident in another jurisdiction (applying the tax residence rules of that jurisdiction) that has a double tax treaty with the United Kingdom and (b) there is a tiebreaker provision in that tax treaty which allocates exclusive residence to that other jurisdiction. Because this analysis is highly factual and may depend on future changes in Midatech’s management and organizational structure, there can be no assurance regarding the final determination of Midatech’s tax residence. Should Midatech be treated as resident for tax purposes in another jurisdiction other than the United Kingdom, it would be subject to taxation in such jurisdiction in accordance with such jurisdiction’s laws, which could result in additional costs and expenses.

Midatech was originally formed as a limited liability company under the laws of England and Wales in 2000 under the name Midatech Limited. Midatech Limited acquired its base nanoparticle technology through an assignment of worldwide commercialization rights and joint ownership of patent rights from the Consejo Superior de Investigaciones Cientificas (“CSIC”) in Madrid, Spain. Midatech Limited subsequently advanced and developed this gold nanoparticle (“GNP”) platform technology to enhance the delivery of medicines in major therapeutic indications where clinical therapeutic options are limited, including diabetes and certain cancers such as liver, ovarian and brain (glioblastoma).

In 2011, Midatech Limited entered into a research and development joint venture with MonoSol Rx LLC (“MonoSol”), a U.S. based company specializing in the development and commercialization of oral dissolvable film technology, to form MidaSol Therapeutics GP (“MidaSol Therapeutics”). The joint venture is developing a novel transbuccal delivery, which means delivery administered through the cheek, of insulin product by incorporating Midatech’s patented GNPs into MonoSol’s oral film. Subject to certain specified circumstances, Midatech is entitled to 50% of the economic interest in the joint venture. This product is currently in Phase IIa clinical trials.

In addition to the MidaSol Therapeutics joint venture, Midatech is collaborating with universities, several pharmaceutical and biotechnology companies and the Dana-Faber Cancer Institute (an affiliate of Harvard Medical School), in addition to two major U.S. pharmaceutical companies and one European specialty pharmaceutical company.

Midatech Pharma PLC was incorporated on September 12, 2014 under the laws of England and Wales, to be the holding company of Midatech Limited and Midatech Wales, under registered number 09216368. On December 8, 2014, Midatech completed its initial public offering of its Ordinary Shares in the United Kingdom.

On December 8, 2014, Midatech acquired Midatech Wales (formerly known as Q Chip) and its subsidiaries in exchange for approximately 5.4 million Ordinary Shares. Founded in 2003 with the acquisition of core intellectual property around micro-fluidics from Cardiff University, Midatech Wales develops a complementary technology and products that allow sustained release of substances over extended periods of time. As well as developing products in its own right, Midatech considers that this technology will provide a platform to incorporate Midatech’s GNP compounds for sustained and extended release.

On December 4, 2015, Midatech acquired DARA and its subsidiaries pursuant to an Agreement and Plan of Merger entered into on June 4, 2015. As a result, DARA became a wholly owned subsidiary of Midatech, and was subsequently renamed Midatech US. For more information, see “

Item 4.B — Business Overview — Acquisition of DARA BioSciences .”

On December 24, 2015, Midatech acquired Zuplenz ® (ondansetron) Oral Soluble Film (“Zuplenz”), a marketed anti-emetic oral soluble film from Galena Biopharma, Inc. for the prevention of chemotherapy-induced nausea and vomiting, radiotherapy-induced nausea and vomiting, and post-operative nausea and vomiting. Midatech paid total up front consideration of $3.75 million in cash, with further cash payments, totaling up to $26 million, becoming payable if quarterly sales in calendar years 2016 and 2017 and annual sales from 2018 to 2022 exceed specified target sales relating to Zuplenz. For more information, see “

Item 4.B — Business Overview — Acquisition of Zuplenz .”

Midatech’s principal executive office and registered offices are located at 65 Innovation Drive, Milton Park, Abingdon, Oxfordshire, United Kingdom OX14 4RQ and its telephone number is +44 (0)1235 888 303. Midatech’s corporate website is located at www.midatechpharma.com. Information contained on Midatech’s website is not part of, or incorporated in, this annual report. Midatech’s authorized representative in the United States is David Benharris, President of Midatech US. Midatech’s agent for service in the United States is Midatech US, located at 8601 Six Forks Road, Suite 160, Raleigh, North Carolina 27615. Midatech’s Ordinary Shares are traded on AIM, a market operated by the London Stock Exchange plc, under the symbol “MTPH,” and its Depositary Shares are traded on the NASDAQ Capital Market under the symbol “MTP.”

Capital Expenditures

Our capital expenditures amounted to £1.02 million, £1.03 million, and £0.05 million for the years ended December 31, 2015, 2014 and 2013, respectively.

For the year ended December 31, 2014, the principal expenditure related to an upgrade to the Group’s manufacturing facilities in Bilbao, Spain to enable the manufacture of sterile material for use in human clinical studies. Capital expenditure in the year ended December 31, 2015 included expenditures on three significant programs:

		Year ended December 31,
(£’s in thousands)		2015				2014				2013
Revenue (United States)			677				--				147
Revenue (Europe) (1)			98				25				--
Grant revenue (2)			600				132				--
Total Revenue			1,375				157				147

Midatech’s Strategy