Summit Therapeutics
plc(‘Summit’, the ‘Company’ or the ‘Group’)
Summit Therapeutics Reports Financial
Results for the Fourth Quarter and Fiscal Year Ended
31 January 2019 and Operational Progress
- Focus on Improving Patient Outcomes for Serious
Infectious Diseases
- Conference Call Today at 12:00pm GMT / 8:00am
EDT
Oxford, UK, and Cambridge, MA, US, 27
March 2019 - Summit Therapeutics plc (NASDAQ: SMMT, AIM:
SUMM), a leader in new mechanism antibiotic innovation, today
reports its financial results for the fourth quarter and fiscal
year ended 31 January 2019 and provides an update on its
operational progress.
“The initiation of our global Phase 3 clinical
trials of ridinilazole brings us closer to becoming a
fully-integrated antibiotics company. Our capabilities span
discovery through late-stage clinical development with an eye
towards building a focussed commercial team," said Mr Glyn
Edwards, Chief Executive Officer of Summit. "We believe
our differentiated portfolio alongside our development plans aimed
at demonstrating meaningful benefits to patients, physicians and
payors have the potential to counter the current trends in the
antibiotic sector.
“Ridinilazole has already shown clinical
superiority against the standard of care in a Phase 2 clinical
trial for C. difficile infection. If we were to achieve similar
results in the ongoing Phase 3 clinical trials, we believe that
would provide us with a compelling data package supporting the
front-line use of ridinilazole in C. difficile infection. With
approximately one third of patients with CDI currently experiencing
unsatisfactory outcomes with the standard of care, ridinilazole has
the potential to significantly improve patient outcomes.
“Further back in our pipeline are important
programmes addressing other high priority targets of gonorrhoea and
the ESKAPE pathogens. The unmet need here is clear, as
antimicrobial resistance is having a major impact on the ability of
patients to achieve cures. Our programmes aim to provide a
potential treatment option that is potent across non-resistant and
resistant infections due to their new mechanisms of action.
Together, our pipeline comprises new mechanism antibiotics that are
being developed to be the most appropriate antibiotic for the
patient in question, which would support good antibiotic
stewardship and potentially reduce the threat of antimicrobial
resistance."
Programme Highlights
Antibiotics Focussed Strategy
- Summit is focussed on the development of new antibiotics that
will meaningfully improve patient outcomes.
- Strategy realigned after the discontinuation of ezutromid for
the treatment of Duchenne muscular dystrophy in June 2018 following
the report of top-line data from the Phase 2 proof of concept
clinical trial, where ezutromid missed its primary and secondary
endpoints.
Ridinilazole for C. difficile Infection
(‘CDI’)
- Phase 3 clinical trials of ridinilazole initiated in February
2019. The trials are expected to support the front-line use of
ridinilazole for the treatment of CDI. The primary endpoint for
both Phase 3 clinical trials tests for superiority of ridinilazole
compared to the standard of care in the treatment of CDI.
Additional endpoints include ridinilazole’s impact on reducing
disease recurrence and in preserving the gut microbiome, as well as
health economic outcomes measures that are intended to help support
commercialisation efforts.
- $12 million option exercised by BARDA in August 2018 under
existing contract to support clinical and regulatory development of
ridinilazole, bringing total committed BARDA non-dilutive funding
to $44 million.
- PLOS One publication highlighted microbiome-preserving activity
of ridinilazole over standard of care in the CoDIFy Phase 2
clinical trial.
SMT-571 for Gonorrhoea
- SMT-571 nominated to progress into IND-enabling studies for the
treatment of gonorrhoea in September 2018.
- Preclinical data presented at various conferences highlighted
SMT-571 as a selective and potent antibiotic with characteristics
that could support its front-line use. Further data published in
Journal of Antimicrobial Chemotherapy showed SMT-571 had
consistently high potency across over 200 clinically relevant
strains of N. gonorrhoeae, including numerous multi- and
extensively-drug resistant strains.
- Up to $4.5 million of non-dilutive funding awarded by CARB-X in
July 2018 to support the preclinical and Phase 1 clinical
development of SMT-571.
ESKAPE Programme
- Novel targets against ESKAPE pathogens identified using the
Discuva Platform.
- Discovery further highlights the power of Summit’s proprietary
Discuva Platform as a potential source of new mechanism antibiotics
to treat serious infectious diseases.
Financial Highlights
- Net proceeds of $24.4 million (£19.2 million) received from the
sale of American Depositary Shares in a private placement that
completed in January 2019.
- Profit for the year ended 31 January 2019 of £7.5
million compared to a loss of £20.2 million for the year ended
31 January 2018.
- Cash and cash equivalents at 31 January 2019 of £26.9
million compared to £20.1 million at
31 January 2018.
Conference Call and Webcast
InformationSummit will host a conference call and webcast
to review the financial results for the fiscal year ended 31
January 2019 today at 12:00pm GMT / 8:00am EDT. To participate in
the conference call, please dial +44 (0)844 5718 892 (UK and
international participants) or +1 631 510 7495 (US local number)
and use the conference confirmation code 3179239. Investors may
also access a live audio webcast of the call via the investors
section of the Company’s website, www.summitplc.com. A replay of
the webcast will be available shortly after the presentation
finishes.
About Summit TherapeuticsSummit
Therapeutics is a leader in antibiotic innovation. Our new
mechanism antibiotics are designed to become the new standards of
care for the benefit of patients and create value for payors and
healthcare providers. We are currently developing new mechanism
antibiotics to treat infections caused by C. difficile, N.
gonorrhoeae and ESKAPE pathogens and are using our proprietary
Discuva Platform to expand our pipeline. For more information,
visit www.summitplc.com and follow us on Twitter @summitplc.
This announcement contains inside information
for the purposes of Article 7 of EU Regulation 596/2014 (MAR).
For more information:
Summit |
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Glyn
Edwards / Richard Pye (UK office) |
Tel: |
44
(0)1235 443 951 |
Michelle Avery (US office) |
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+1
617 225 4455 |
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Cairn Financial Advisers LLP (Nominated
Adviser) |
Tel: |
+44
(0)20 7213 0880 |
Liam
Murray / Tony Rawlinson |
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N+1 Singer (Joint Broker) |
Tel: |
+44
(0)20 7496 3000 |
Aubrey Powell / Jen Boorer, Corporate FinanceTom Salvesen,
Corporate Broking |
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Bryan Garnier & Co Limited (Joint Broker) |
Tel: |
+44
(0)20 7332 2500 |
Phil
Walker / Dominic Wilson |
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MSL Group (US) |
Tel: |
+1
781 684 6557 |
Jon
Siegal |
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summit@mslgroup.com |
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Consilium Strategic Communications (UK) |
Tel: |
+44
(0)20 3709 5700 |
Mary-Jane Elliott / Sue Stuart / Jessica Hodgson / |
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summit@consilium-comms.com |
Lindsey Neville |
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Forward Looking StatementsAny
statements in this press release about the Company’s future
expectations, plans and prospects, including but not limited to,
statements about the potential benefits and future operation of the
BARDA or CARB-X contract, including any potential future payments
thereunder, the clinical and preclinical development of the
Company’s product candidates, the therapeutic potential of the
Company’s product candidates, the potential of the Discuva
Platform, the potential commercialisation of the Company’s product
candidates, the sufficiency of the Company’s cash resources, the
timing of initiation, completion and availability of data from
clinical trials, the potential submission of applications for
marketing approvals and other statements containing the words
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project,"
"should," "target," "would," and similar expressions, constitute
forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from those indicated by such forward-looking statements
as a result of various important factors, including: the ability of
BARDA or CARB-X to terminate our contract for convenience at any
time, the uncertainties inherent in the initiation of future
clinical trials, availability and timing of data from ongoing and
future clinical trials and the results of such trials, whether
preliminary results from a clinical trial will be predictive of the
final results of that trial or whether results of early clinical
trials or preclinical studies will be indicative of the results of
later clinical trials, expectations for regulatory approvals, laws
and regulations affecting government contracts, availability of
funding sufficient for the Company’s foreseeable and unforeseeable
operating expenses and capital expenditure requirements and other
factors discussed in the "Risk Factors" section of filings that the
Company makes with the Securities and Exchange Commission,
including the Company’s Annual Report on Form 20-F for the fiscal
year ended 31 January 2018. Accordingly, readers should not place
undue reliance on forward-looking statements or information. In
addition, any forward-looking statements included in this press
release represent the Company’s views only as of the date of this
release and should not be relied upon as representing the Company’s
views as of any subsequent date. The Company specifically disclaims
any obligation to update any forward-looking statements included in
this press release.
CHAIRMAN'S STATEMENT
Over the past year, Summit gained a new identity
as an antibiotics company. Antibiotics have always been a part of
our core strategy. Ridinilazole is our lead programme now in Phase
3 clinical trials, and the Discuva Platform is bolstering our
pipeline. However, in the past, Summit was well known for its
programme in Duchenne muscular dystrophy (‘DMD’).
While we were disappointed to announce negative
results from our Phase 2 clinical trial in DMD in June 2018, they
allowed us to align the entire company’s efforts towards delivering
new antibiotics that meaningfully improve patient outcomes. The
Phase 2 DMD trial generated a high-quality data set that enabled us
to come to the definitive conclusion that ezutromid was not
providing a benefit to patients. What followed was a swift,
strategic pivot to become a leading antibiotics company with what
we believe are the capabilities to radically change the current
antibiotic paradigm through a single focus: innovation.
It is abundantly clear that the world needs new
antibiotics. Too many patients with serious bacterial infections
have unsatisfactory outcomes with today’s armamentarium of
decades-old classes of antibiotics.We aim to change that. Our goal
is to bring innovation into the discovery, development and
commercialisation of new mechanism antibiotics for serious
infectious diseases.
The acquisition of our Discuva Platform in
December 2017 strengthened our capabilities in antibiotics by
incorporating discovery efforts into Summit. This Platform,
alongside our team of scientists, has the potential to disrupt the
field of antibiotic discovery. Over the past year, we have added
three new programmes to our pipeline, all of which originated from
the Discuva Platform, an encouraging early sign of how prolific we
believe our proprietary platform can be.
Two of the programmes we added to our pipeline
are for the treatment of gonorrhoea. We are entering a world of
super gonorrhoea, infections that are extensively drug resistant.
One such case of super gonorrhoea arrived in the UK last year, with
further cases reported since. Neisseria gonorrhoeae is particularly
clever when it comes to evading antibiotics. It has consistently
gained resistance to the antibiotics used to treat it and keeps
this resistance over time. The only recommended treatment is
failing in many cases, and there are no other recommended drugs
available to treat gonorrhoea. In order to gain the upper hand
against N. gonorrhoeae, society desperately needs new mechanism
antibiotics.
Through the Discuva Platform, we have identified
two new targets for N. gonorrhoeae. Our focus in gonorrhoea is on
our lead clinical candidate, SMT-571, which was nominated in
September 2018. In preclinical studies, SMT-571 has demonstrated
potent activity across hundreds of clinically relevant N.
gonorrhoeae strains, including numerous multi- and extensively-drug
resistant strains. Our opportunity in gonorrhoea is to be the next
treatment option recommended for the 78 million estimated annual
cases worldwide.
Our third programme added in 2018 addresses
serious hospital-acquired infections caused by the ESKAPE
pathogens. These infections are plagued by resistance, which result
in poor patient outcomes and substantial medical costs. As is the
case with all of our programmes, we believe that developing new
mechanism antibiotics that are designed to target a specific
infection or pathogen could result in significantly improved
patient outcomes and reduced healthcare costs. We look forward to
providing an update on this programme in 2019.
Our late-stage antibiotic ridinilazole for the
treatment of C. difficile infection has made a strong start to 2019
following the progress made in our manufacturing processes during
2018. We dosed the first patient in our much-anticipated Phase 3
clinical trials in February. These Phase 3 clinical trials of
ridinilazole truly exemplify our innovation in development and
planning for commercial success.
Our goal is to send a clear message to
physicians and payors that ridinilazole is a superior product
clinically and economically and should be used as a front-line
treatment of CDI. We have designed the Phase 3 clinical trials to
support this goal. The primary endpoint for the Phase 3 clinical
trials aims to show superiority of ridinilazole over the standard
of care, vancomycin, in sustained clinical response. In other
words, the trials are designed to provide evidence that patients
are being cured and remaining free of CDI, something which doesn’t
happen in approximately one-third of CDI patients treated with
vancomycin. There are over a million cases of CDI in the US and
Europe every year, representing unacceptably high number of
patients who are not receiving a satisfactory clinical outcome.
Our Phase 3 clinical programme also is designed
to support commercialisation through the inclusion of health
economic outcomes measures. Unsatisfactory patient outcomes lead to
higher healthcare costs. If treatment with ridinilazole improves
patient outcomes, it could reduce those healthcare costs and
potentially support its uptake by healthcare providers.
We believe the clinical and economic outcomes
will both play a key role in ensuring ridinilazole’s potential
commercial success. Superior clinical and positive health economic
outcomes could provide healthcare providers with the information to
encourage use, guideline writers to change their recommendations
and payors to provide reimbursement. We are bold in this endeavour,
but the positive results from our Phase 2 clinical trial of
ridinilazole and lessons from past antibiotic launches provide us
with confidence that this is the right path to achieve success.
Our differentiated approach to antibiotic
development continues to be endorsed by third parties. In 2018,
BARDA exercised one of its options in our award of up to $62
million for the clinical and regulatory development of
ridinilazole. The total committed capital from BARDA is now $44
million. Also in 2018, we received a grant worth up to $4.5 million
from the public-private partnership, CARB-X, to support the
development of SMT-571 through the end of a Phase 1 clinical trial.
These awards are further endorsement of Summit’s strategy and
innovation in new mechanism antibiotics. In addition to these
non-dilutive capital sources, we believe our singular focus as an
antibiotics company and clear mission to bring new mechanism
antibiotics to patients are increasingly resonating with the
investment community, including new and existing shareholders.Our
people are central to being successful in antibiotic research. We
have a team with deep expertise and experience in infectious
diseases from conducting early stage research to running global
clinical trials and successfully launching new antibiotics.
Our ambitious goals in the discovery of new
mechanism antibiotics through to commercialisation of these
products ourselves in key territories rely on having the support of
our shareholders and the right team in place to do so. We thank our
shareholders for supporting us in this vision and our employees,
who are dedicated to bringing potentially life-saving treatments to
patients. Together, we are redefining antibiotic development and
bringing much needed innovation to this crucial area of
medicine.
Frank Armstrong, FRCPE, FFPMNon-Executive
Chairman
OPERATIONAL REVIEW
Summit is a leader in antibiotic innovation. The
Company is developing new antibiotics with the potential to
significantly improve patient outcomes in serious infectious
diseases. Summit aims to become a fully integrated antibiotics
company. Summit’s lead antibiotic candidate is ridinilazole, a
precision antibiotic in Phase 3 clinical development for front-line
treatment of C. difficile infection (‘CDI’). In addition, the
Company is advancing SMT-571 for the treatment of gonorrhoea and a
series of new mechanism antibiotics against hospital-acquired
infections caused by the ESKAPE pathogens.
Summit’s antibiotic research and development
activities have and continue to receive significant funding support
from third party organisations including BARDA, CARB-X, the
Wellcome Trust and Innovate UK.
Strategy
Since the turn of the century, few new mechanism
antibiotics have entered the market. Overuse or misuse of current
antibiotics is fuelling antimicrobial resistance ('AMR'), and
without the introduction of new antibiotics, the world is headed
for an era where once easily curable infections could become global
health crises. According to the US Centers for Disease Control and
Prevention (‘CDC’), at least 2 million people are infected with
antibiotic resistant bacteria in the US every year, and of those,
at least 23,000 people die as a result. The 2016 O’ Neill Review on
Antimicrobial Resistance stated that by 2050, an estimated 10
million lives a year are at risk worldwide due to rise of
antibiotic resistant infections.
Although the need for new antibiotics is
apparent, the companies developing antibiotics are not highly
valued in the market - those antibiotics which are commercially
available are not selling enough to sustain the respective
developer, and investors are reluctant to invest their money where
returns are likely limited.
Summit believes part of the solution to this
problem is innovation. It has identified where it believes
innovation could lead to success. Summit aims to develop new
antibiotics that can show significant advantages over the current
standards of care and offer compelling value propositions to
payors. Summit is doing so through three key areas: discovery of
new science, development programmes aimed at showing
differentiation and commercialisation plans aimed at demonstrating
the value of its antibiotic candidates. Our approach is about
ensuring the patient receives the right drug for the right
infection.
DiscoverySummit’s discovery and development
efforts focus on antibiotics which have a new mechanism of action.
One potential advantage to this approach is all strains of that
bacteria could be equally susceptible to the new mechanism
antibiotic, including those resistant to currently marketed
antibiotics. In addition, resistance to the new mechanism
antibiotic may develop at a slower rate than it does to antibiotics
that are related to, or part of, an already marketed antibiotic
class.
Summit uses its Discuva Platform to identify new
bacterial targets and optimise new antibiotics against these
targets. As historical antibiotic discovery has focussed on
broad-spectrum antibiotics, many of the new mechanisms being
discovered are more targeted to specific bacteria. This allows
Summit to design its programmes to be specific to an infectious
disease or pathogen, which could have the advantage of sparing good
bacteria that can help to ward off disease and further improve
patient outcomes.
DevelopmentImproving patient outcomes is central
to Summit in the development of its new mechanism antibiotics.
Summit adopts a creative approach to its research and development
activities, for example by developing clinical trials that show
wider societal value of its new antibiotics. This could be by
inclusion of clinical or economic metrics in clinical trials that
support the use of its compounds over the current standard of care
for the patient in question. This approach could target the entire
patient population or more niched patient populations that still
afford Summit a commercial opportunity. The Company believes that
demonstrating improved patient outcomes in clinical trials could
result in favourable drug labels upon potential regulatory
approvals and encourage adoption of the new mechanism antibiotic by
the medical community.
CommercialisationWhile having the right drug
label is part of the solution in offering compelling value
propositions to payors, Summit also believes in the need to deliver
economic data at launch that show potential cost-saving advantages
of using a new drug over the current standard of care. The Company
believes having both the appropriate drug label and health economic
data could command fair pricing that make antibiotic research and
development a more attractive proposition.
Through these collective scientific, development
and economic efforts, Summit believes it can position its new
mechanism antibiotics for commercial success and bring urgently
needed medicines to patients. In addition, the Company’s strategy
favours the use of targeted antibiotics over broad-spectrum
antibiotics, a key element of good antibiotic stewardship in the
drive to reduce AMR and preserve use of important broad-spectrum
antibiotics for serious idiopathic infections.
Ridinilazole: A Potential Front-Line
Antibiotic to Combat C. difficile Infection
Summit’s strategy is exemplified by
ridinilazole. Ridinilazole is a new mechanism, precision antibiotic
in Phase 3 development for front-line treatment of CDI.
There are over one million cases of CDI in the
US and Europe per year, resulting in about 29,000 deaths annually
in the US alone. The mainstay CDI treatment is the broad-spectrum
antibiotic, vancomycin. Initial treatment with vancomycin fails in
approximately one-third of patients, driven by a high rate of
patients having a recurrence of the disease within 30 days after
treatment. This recurrence is caused by substantial disruption to
the gut microbiome driven by the use of broad-spectrum antibiotics.
Each recurrent episode of CDI is typically more severe than the
prior episode and carries an increased risk of mortality. As such,
reducing disease recurrence is the key clinical issue facing
CDI.
Ridinilazole is designed to selectively target
C. difficile bacteria at the site of infection without causing
collateral damage to the gut microbiome, and therefore has the
potential to be a front-line therapy that treats not only the
initial CDI infection, but importantly reduces the rate of CDI
recurrence. In August 2018, data were published showing patients
treated with ridinilazole in the Company’s Phase 2 proof of concept
clinical trial had significantly preserved gut microbiomes versus
the standard of care vancomycin. In that clinical trial,
ridinilazole demonstrated clinical and statistical superiority over
vancomycin in sustained clinical response (‘SCR’), driven by its
preservation of patients’ microbiomes that reduced CDI recurrence
by 59%.
Ridinilazole’s Phase 3 clinical trials have been
designed to replicate the positive results from the Phase 2
clinical trial. SCR is the primary endpoint that measures cure of
the initial infection and whether patients have disease recurrence
30 days after completing treatment. The Phase 3 programme comprises
two global, randomised, double-blind, active controlled clinical
trials called Ri-CoDIFy 1 and Ri-CoDIFy 2. The trials are running
concurrently with each expected to enrol approximately 680 patients
at sites in North America, Latin America, Europe, Australia and
Asia. Half of the patients in the trials receive ridinilazole, and
the other half receive vancomycin. The Phase 3 trials also include
various health economic outcome measures, such as hospital
readmission rates and length of hospital stay, to help support the
commercialisation of ridinilazole, if approved. Dosing of the first
patient in the clinical trials began in February 2019, and top-line
data are expected to be reported in the second half of 2021.
The ongoing clinical and regulatory development
of ridinilazole is being supported by a contract with the US
Biomedical Advanced Research and Development Authority (‘BARDA’)
that potentially provides up to $62 million in non-dilutive
funding. To date, total committed BARDA funding under this contract
is $44 million, including a $12 million option that was exercised
by BARDA in August 2018 and which will be drawn down to
specifically support drug manufacturing activities required for the
submission of a new drug application to the US Food and Drug
Administration and other regulatory activities.
Summit expects to commercialise ridinilazole in
the US with a targeted salesforce, if approved. The Company is
evaluating its options to maximise the value of ridinilazole in
other territories outside of certain Latin American and Caribbean
countries, where it has a commercial agreement with Eurofarma
Laboratórios SA (‘Eurofarma’).
SMT-571: Preclinical Antibiotic for the
Treatment of Gonorrhoea
Gonorrhoea is recognised as an urgent bacterial
threat by the CDC and designated as a high priority pathogen by the
World Health Organization (‘WHO’). The WHO estimates there are
approximately 78 million new cases of gonorrhoea globally each
year. There is now only one treatment option recommended by the CDC
for the treatment of gonorrhoea, a combination of two generic
antibiotics. Resistance to this treatment option is growing, and
alarmingly there are currently no other recommended antibiotics
available.
Summit is developing SMT-571 as a new antibiotic
for the treatment of gonorrhoea. Working by a novel mechanism of
action, SMT-571 has shown high potency for a range of clinically
relevant N. gonorrhoeae strains in in vitro studies, including
numerous multi- and extensively-drug resistant strains. In
September 2018, SMT-571 was nominated as a preclinical candidate
for progression into investigational new drug (‘IND’)-enabling
studies. Should SMT-571 successfully complete these IND-enabling
studies, Summit expects to initiate a Phase 1 clinical trial in the
second half of 2019.
In July 2018, Summit was awarded up to $4.5
million in non-dilutive funding from CARB-X, a public-private
partnership dedicated to accelerating antibacterial research and
development to address the rising global threat of drug-resistant
bacteria. Summit will receive an initial $2.0 million in funding
with the remaining $2.5 million split into two option segments,
which may be exercised by CARB-X upon the achievement of certain
development milestones. The full funding would support the
development of SMT-571 through the completion of a Phase 1 clinical
trial.
Discuva Platform: An Engine to Generate
New Mechanism Antibiotics
The development of Summit’s pipeline of new
mechanism antibiotics is underpinned by its proprietary Discuva
Platform. From discovery through the selection of optimised
clinical candidates, Summit believes the Discuva Platform has the
potential to deliver antibiotics with new mechanisms of action and
a low likelihood of resistance development combined with a targeted
spectrum of activity. The Discuva Platform utilises proprietary
libraries of a wide range of bacteria that can be used to generate
new mechanism antibiotics against bacteria that are classified as
urgent or high-risk threats by the CDC and WHO.
ESKAPE ProgrammeIn September 2018, a new
discovery programme targeting ESKAPE pathogens was unveiled. The
ESKAPE pathogens (Enterococcus faecium, Staphylococcus aureus,
Klebsiella pneumoniae, Acinetobacter baumannii, Pseudomonas
aeruginosa, Enterobacter spp.) are a group of bacteria that
represent a leading cause of hospital acquired infections around
the world and are subject to increasing rates of resistance to
existing antibiotic classes. Summit expects to provide an update on
its first series of antibiotics from this programme in 2019.
Second Novel Gonorrhoea TargetIn June 2018,
identification of a second novel target to kill N. gonorrhoeae
distinct from the one targeted by SMT-571 was reported, along with
the discovery of a new series of compounds that have activity
against this target. The development of this second series of
compounds has been supported in part by a grant from Innovate UK.
The development of this programme is currently on hold as the
Company pursues its lead candidate, SMT-571, for the treatment of
gonorrhoea.
Roche CollaborationPrior to Summit’s acquisition
of Discuva Limited, Roche and Discuva entered into a collaboration
using the Discuva Platform for the discovery and development of new
antibiotic compounds in 2014. The joint research element of the
collaboration concluded in early 2018, and Roche is solely
responsible for continuing development of any compound that was
identified under the collaboration, with Summit eligible to receive
from Roche milestones and royalty payments based on the successful
development and commercialisation of any such compound.
Duchenne Muscular Dystrophy
(‘DMD’)
In June 2018, Summit discontinued the
development of ezutromid, the Company’s lead utrophin modulator for
the treatment of DMD. This decision was taken following the
reporting in June 2018 that the Phase 2 proof of concept clinical
trial in patients with DMD did not meet its primary or secondary
endpoints. The Company believes the Phase 2 trial provided
comprehensive data on a variety of endpoints that would have
enabled the detection of any clinical benefit of ezutromid if it
existed. These data have the potential to be helpful for other
researchers and companies in the DMD community, and therefore,
Summit has submitted anonymised, individual data to several DMD
research consortia. Summit sincerely thanks the participants of
that Phase 2 clinical trial for their contributions in furthering
DMD research for the entire DMD community. Summit has substantively
completed close-out activities related to ezutromid.
Operational and Board
Changes
As a consequence of the discontinuation of
ezutromid, the Company reduced its headcount by 17 employees, or
approximately 23% of total headcount. Separately, Erik Ostrowski
stepped down as Chief Financial Officer to pursue other
opportunities at the end of December 2018. The Company plans to
appoint a new Chief Financial Officer in due course.
There were also changes to the Board of
Directors as part of the Company's business re-alignment to focus
on the development of new mechanism antibiotics with Dr Barry Price
and Professor Stephen Davies stepping down as Non-Executive
Directors in September 2018.
FINANCIAL REVIEW
Revenue
Revenue was £43.0 million for the year ended
31 January 2019 compared to £12.4 million for the year
ended 31 January 2018.
Revenues in each of these periods relates
primarily to the Group’s licence and collaboration agreement with
Sarepta Therapeutics Inc (‘Sarepta’). The increase in revenues was
driven by the recognition of all remaining deferred revenue related
to the Sarepta agreement following the Group’s decision to
discontinue development of ezutromid in June 2018. This recognition
of deferred revenues did not impact the Group's cash flows. Revenue
recognised during the year ended 31 January 2019 relating
to the Sarepta agreement amounted to £42.3 million. This included
£6.3 million of cost-share income which the Group continues to
receive.
The Group also recognised £0.5 million of
revenue during the year ended 31 January 2019 relating to
the receipt of a $2.5 million (£1.9 million) upfront payment in
respect of the licence and commercialisation agreement signed with
Eurofarma in December 2017 and £0.2 million of revenue pursuant to
a research collaboration agreement between the Group’s subsidiary
Discuva Limited and F. Hoffmann - La Roche Limited (‘Roche’). The
research services period under the Roche agreement ended in
February 2018.
See Note 1 'Basis of Accounting - Adoption of
IFRS 15 Revenue from contracts with customers' for details of the
impact of the initial adoption of IFRS 15.
Other Operating Income
Other operating income increased by £12.5
million to £15.2 million for the year ended
31 January 2019 from £2.7 million for the year ended
31 January 2018. This increase resulted primarily from
the recognition of £13.1 million during the year ended 31 January
2019, as compared to £1.8 million during the year ended 31 January
2018 from the Group's funding contract with BARDA for the
development of ridinilazole for the treatment of CDI.
The Group also recognised other operating income
of £1.2 million during the year ended 31 January 2019
related to the Group's funding arrangements with CARB-X and
Innovate UK awards for its antibiotic pipeline activities. In
addition, £0.3 million was recognised in respect of UK
Research and Development Expenditure Credits.
During the year ended 31 January 2019,
the Group also recognised £0.5 million of other operating income
resulting from the release of the Group's financial liabilities on
funding arrangements relating to DMD-related US not for profit
organisations because of the discontinuation of ezutromid's
development.
Operating Expenses
Research and Development ExpensesResearch and
development expenses increased by £10.2 million to £39.2 million
for the year ended 31 January 2019 from £29.0 million for
the year ended 31 January 2018. This was due to increased
expenditure related to the Group's CDI programme, antibiotic
pipeline development activities, and research and development
related staffing and facilities costs, offset by decreased
expenditure related to the discontinued DMD programme.
In more detail, investment into the CDI
programme increased by £12.3 million to £17.9 million for the year
ended 31 January 2019 from £5.6 million for the year
ended 31 January 2018. This increase primarily related to
clinical preparatory activities and manufacturing activities
related to the Phase 3 clinical trials of ridinilazole that
commenced in February 2019. Investment in the Group's antibiotic
pipeline development activities was £1.9 million for the year ended
31 January 2019 compared to £0.1 million for the year
ended 31 January 2018, which reflects activities post the
completion of the acquisition of Discuva Limited that included the
proprietary Discuva Platform in December 2017.
Expenses related to the DMD programme decreased
by £6.5 million to £9.5 million for the year ended
31 January 2019 from £16.0 million for the year ended
31 January 2018. This was driven by the decision to
discontinue development of ezutromid in June 2018, which resulted
in a decrease in the clinical and manufacturing costs, as well as a
reduction in next and future generation utrophin modulation
programme research activities.
Other research and development expenses
increased by £2.5 million to £9.8 million during the year ended
31 January 2019 as compared to £7.3 million during the
year ended 31 January 2018, which was due to an increase
in staff and facilities costs related to the CDI and antibiotic
development teams, a non-cash charge related to the acceleration of
share-based payment expenses resulting from the surrender of share
option awards and a non-cash charge for amortisation of the
proprietary Discuva Platform.
General and Administration ExpensesGeneral and
administration expenses increased by £0.3 million to £12.3 million
for the year ended 31 January 2019 from £12.0 million for
the year ended 31 January 2018. This increase was
primarily due to a non-cash charge for the acceleration of
share-based payment expenses resulting from the surrender of share
option awards, a loss on recognition of contingent consideration
payable relating to the acquisition of Discuva Limited, offset by a
net positive movement in exchange rate variances.
Impairment of Goodwill and Intangible AssetsAs a
result of discontinuing the development of ezutromid, the Group
recognised an impairment charge during the year ended
31 January 2019 of £4.0 million relating to the utrophin
programme intangible asset and goodwill associated with the
acquisition of MuOx Limited.
Finance Income
Finance income was £2.8 million for the year
ended 31 January 2019. This related primarily to the
remeasurement of the Group’s financial liabilities on funding
arrangements relating to DMD-related US not for profit
organisations following the discontinuation of the development of
ezutromid in June 2018. Finance income was £3.1 million for the
year ended 31 January 2018. This related primarily to the
derecognition of the Group's financial liability on the Wellcome
Trust funding arrangement, after the Group and the Wellcome Trust
entered into a revenue sharing agreement in October 2017.
Finance Costs
Finance costs recognised during the year ended
31 January 2019 relate to the unwinding of the discounts
associated with financial liabilities on funding arrangements and
provisions. Finance costs were £0.4 million for the year ended
31 January 2019 compared to £1.2 million for the year
ended 31 January 2018. This decrease was due to a
reduction in the unwinding of the discount following the
remeasurement of the financial liabilities on funding arrangements
relating to DMD-related US not for profit organisations to £nil
following the discontinuation of the development of ezutromid in
June 2018.
Income tax
The income tax credit for the year ended
31 January 2019 was £2.5 million as compared to £3.8
million for the year ended 31 January 2018. This change
in income tax credit was driven by a reduction in the Group's
accrued UK research and development tax credit, as there are
insufficient losses to surrender for the year ended
31 January 2019, due to the recognition of all remaining
deferred revenue related to the Sarepta agreement following the
Group's decision to discontinue the development of ezutromid in
June 2018, to be eligible to receive a full research and
development tax credit. This movement was offset by the release of
deferred tax liabilities associated with the impairment of goodwill
and amortisation of intangible assets.
The Group's net corporation tax receivable
includes research and development tax credits receivable on
qualifying expenditure in respect of previous financial years. The
Group anticipates that it will receive these research and
development tax credit payments in the first half of 2019, after
receiving confirmation of intention to pay from the HM
Revenue & Customs, or HMRC, in March 2019.
Profit / (Loss)
Profit before income tax was £5.0 million for
the year ended 31 January 2019 compared to a loss before
income tax of £24.0 million for the year ended
31 January 2018. The profit recorded for the year ended
31 January 2019 was due to the recognition of all
remaining deferred revenue related to the Sarepta agreement
following the Group's decision to discontinue the development of
ezutromid in June 2018. This recognition of deferred revenues did
not impact the Group's cash flows.
Net profit was £7.5 million for the year ended
31 January 2019 with a basic and diluted profit per share
of 9 pence compared to a net loss of £20.2 million for the year
ended 31 January 2018 with a basic and diluted loss per
share of 31 pence.
Cash Flows
The Group had a net cash inflow of £6.3 million
for the year ended 31 January 2019 compared to a net cash
outflow of £6.0 million for the year ended
31 January 2018.
Operating ActivitiesNet cash used in operating
activities for the year ended 31 January 2019 was £26.8
million compared to £14.7 million for the year ended
31 January 2018. This increase of £12.1 million was
primarily driven by an increase in operating costs of £6.4 million,
a net reduction in cash received from licensing agreements and
funding arrangements of £2.5 million and a negative movement in
taxation cash flows of £3.2 million due to timing of receipt of the
Group’s research and development tax credits receivable on
qualifying expenditure in respect of previous financial years.
Investing ActivitiesNet cash used in investing
activities for the year ended 31 January 2019 was £0.3
million compared to £5.2 million for the year ended
31 January 2018. Net cash outflow from investing
activities for the year ended 31 January 2019 represents
contingent consideration paid and amounts paid to acquire property,
plant and equipment and intangible assets, net of bank interest
received on cash deposits. Net cash outflow from investing
activities for the year ended 31 January 2018 included
£4.8 million used in the acquisition of Discuva Limited in December
2017, net of cash acquired as part of the transaction, and a
further £0.5 million used to acquire property, plant and equipment
and intangible assets mainly in relation to the relocation of our
UK office in Oxford.
Financing ActivitiesNet cash generated from
financing activities for the year ended 31 January 2019
was £33.4 million. This includes £14.1 million of net proceeds
received following the Group's equity placing on the AIM market of
the London Stock Exchange in March 2018, £19.2 million of net
proceeds received following the Group's private placement of ADSs
in the United States in January 2019, and £0.1 million received
following the exercise of Restricted Stock Units and share options.
Net cash generated from financing activities for the year ended
31 January 2018 of £13.9 million included £13.5 million
of net proceeds received following the Group’s underwritten public
equity offering in September 2017, and £0.4 million received
following the exercise of warrants and share options.
Financial Position
As at 31 January 2019, total cash and
cash equivalents held were £26.9 million (31 January 2018: £20.1
million).
Headcount
Headcount for the Group as at
31 January 2019 was 61 compared to 76 as at
31 January 2018, with this reflecting implementation of
cost-cutting measures following the decision to discontinue
ezutromid development in June 2018.
Share Capital
On 29 March 2018, the Company completed an
equity placing on the AIM market of the London Stock Exchange,
issuing 8,333,333 new ordinary shares at a price of 180 pence per
share. Total gross proceeds of £15.0 million were raised and
directly attributable transaction costs of £0.9 million were
incurred and accounted for as a deduction from equity.
On 9 January 2019, the Company completed a
private placement of 15,625,000 American Depository Shares ('ADS')
at a price of $1.60 per ADS. Each ADS represents five ordinary
shares of one penny nominal value each in the capital of the
Company, meaning 78,125,000 new ordinary shares were issued. Total
gross proceeds of $25.0 million (£19.6 million) were raised and
directly attributable transaction costs of £0.4 million were
incurred.
During the year 367,924 Restricted Stock Units
and share options were exercised raising net proceeds of £0.1
million.
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
(audited) For the year ended 31 January 2019
|
|
|
Year ended 31 January 2019 |
|
Year ended 31 January 2019 |
|
Year ended 31 January 2018 |
|
|
|
|
|
|
|
(Adjusted*) |
|
Note |
|
$000s |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
|
Revenue |
|
|
56,496 |
|
|
43,012 |
|
|
12,360 |
|
|
|
|
|
|
|
|
|
Other operating
income |
|
|
19,907 |
|
|
15,156 |
|
|
2,725 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Research
and development |
|
|
(51,455 |
) |
|
(39,174 |
) |
|
(28,970 |
) |
General
and administration |
|
|
(16,211 |
) |
|
(12,342 |
) |
|
(11,999 |
) |
Impairment of goodwill and intangible assets |
|
|
(5,234 |
) |
|
(3,985 |
) |
|
— |
|
Total operating expenses |
|
|
(72,900 |
) |
|
(55,501 |
) |
|
(40,969 |
) |
Operating
profit / (loss) |
|
|
3,503 |
|
|
2,667 |
|
|
(25,884 |
) |
|
|
|
|
|
|
|
|
Finance income |
|
|
3,662 |
|
|
2,788 |
|
|
3,096 |
|
Finance costs |
|
|
(557 |
) |
|
(424 |
) |
|
(1,164 |
) |
Profit / (loss) before income tax |
|
|
6,608 |
|
|
5,031 |
|
|
(23,952 |
) |
|
|
|
|
|
|
|
|
Income
tax |
|
|
3,278 |
|
|
2,496 |
|
|
3,762 |
|
Profit / (loss) for the year |
|
|
9,886 |
|
|
7,527 |
|
|
(20,190 |
) |
|
|
|
|
|
|
|
|
Other
comprehensive income / (loss) |
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
|
|
25 |
|
|
19 |
|
|
(13 |
) |
Total comprehensive profit / (loss) for the
year |
|
|
9,911 |
|
|
7,546 |
|
|
(20,203 |
) |
|
|
|
|
|
|
|
|
Basic and diluted earnings / (loss) per ordinary share from
operations |
2 |
|
12 cents |
|
9 pence |
|
(31) pence |
* See Note 1 - ‘Basis of Accounting - Adoption
of IFRS 15 Revenue from contracts with customers’.
Consolidated Statement of Comprehensive Income
(audited) For the three months ended 31 January 2019
|
|
|
Three months ended 31 January
2019 |
|
Three months ended 31 January
2019 |
|
Three months ended 31 January 2018 |
|
|
|
|
|
|
|
(Adjusted*) |
|
Note |
|
$000s |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
|
Revenue |
|
|
663 |
|
|
505 |
|
|
3,248 |
|
|
|
|
|
|
|
|
|
Other operating
income |
|
|
8,113 |
|
|
6,177 |
|
|
1,151 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Research
and development |
|
|
(12,531 |
) |
|
(9,540 |
) |
|
(9,902 |
) |
General
and administration |
|
|
(3,969 |
) |
|
(3,022 |
) |
|
(5,096 |
) |
Total operating expenses |
|
|
(16,500 |
) |
|
(12,562 |
) |
|
(14,998 |
) |
Operating
loss |
|
|
(7,724 |
) |
|
(5,880 |
) |
|
(10,599 |
) |
|
|
|
|
|
|
|
|
Finance income |
|
|
3 |
|
|
2 |
|
|
9 |
|
Finance costs |
|
|
(62 |
) |
|
(47 |
) |
|
(496 |
) |
Loss before income tax |
|
|
(7,783 |
) |
|
(5,925 |
) |
|
(11,086 |
) |
|
|
|
|
|
|
|
|
Income
tax |
|
|
1,006 |
|
|
766 |
|
|
(197 |
) |
Loss for the period |
|
|
(6,777 |
) |
|
(5,159 |
) |
|
(11,283 |
) |
|
|
|
|
|
|
|
|
Other
comprehensive losses |
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
|
|
(8 |
) |
|
(6 |
) |
|
(8 |
) |
Total comprehensive loss for the period |
|
|
(6,785 |
) |
|
(5,165 |
) |
|
(11,291 |
) |
|
|
|
|
|
|
|
|
Basic and diluted loss per ordinary share from
operations |
2 |
|
(7) cents |
|
(5) pence |
|
(16) pence |
* See Note 1 - ‘Basis of Accounting - Adoption
of IFRS 15 Revenue from contracts with
customers’Consolidated Statement of Financial
Position (audited) As at 31 January 2019
|
|
|
31 January 2019 |
|
31 January 2019 |
|
31 January 2018 |
|
|
|
|
|
|
|
(Adjusted*) |
|
Note |
|
$000s |
|
£000s |
|
£000s |
ASSETS |
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
|
Goodwill |
|
|
2,383 |
|
|
1,814 |
|
|
2,478 |
|
Intangible assets |
|
|
13,928 |
|
|
10,604 |
|
|
14,785 |
|
Property, plant and
equipment |
|
|
809 |
|
|
616 |
|
|
809 |
|
|
|
|
17,120 |
|
|
13,034 |
|
|
18,072 |
|
Current
assets |
|
|
|
|
|
|
|
Trade and other
receivables |
|
|
17,794 |
|
|
13,547 |
|
|
11,134 |
|
Current tax
receivable |
|
|
8,312 |
|
|
6,328 |
|
|
4,654 |
|
Cash and cash
equivalents |
|
|
35,278 |
|
|
26,858 |
|
|
20,102 |
|
|
|
|
61,384 |
|
|
46,733 |
|
|
35,890 |
|
Total assets |
|
|
78,504 |
|
|
59,767 |
|
|
53,962 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
|
Deferred revenue |
|
|
(1,092 |
) |
|
(831 |
) |
|
(27,270 |
) |
Financial liabilities
on funding arrangements |
|
|
— |
|
|
— |
|
|
(3,090 |
) |
Provisions for other
liabilities and charges |
|
|
(2,431 |
) |
|
(1,851 |
) |
|
(1,641 |
) |
Deferred tax
liability |
|
|
(2,200 |
) |
|
(1,675 |
) |
|
(2,379 |
) |
|
|
|
(5,723 |
) |
|
(4,357 |
) |
|
(34,380 |
) |
Current
liabilities |
|
|
|
|
|
|
|
Trade and other
payables |
|
|
(11,643 |
) |
|
(8,865 |
) |
|
(8,932 |
) |
Deferred revenue and
income |
|
|
(4,432 |
) |
|
(3,374 |
) |
|
(13,834 |
) |
Contingent consideration |
|
|
(826 |
) |
|
(629 |
) |
|
— |
|
|
|
|
(16,901 |
) |
|
(12,868 |
) |
|
(22,766 |
) |
Total liabilities |
|
|
(22,624 |
) |
|
(17,225 |
) |
|
(57,146 |
) |
Net assets / (liabilities) |
|
|
55,880 |
|
|
42,542 |
|
|
(3,184 |
) |
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Share capital |
|
|
2,107 |
|
|
1,604 |
|
|
736 |
|
Share premium
account |
|
|
121,901 |
|
|
92,806 |
|
|
60,237 |
|
Share-based payment
reserve |
|
|
1,508 |
|
|
1,148 |
|
|
6,743 |
|
Merger reserve |
|
|
3,976 |
|
|
3,027 |
|
|
3,027 |
|
Special reserve |
|
|
26,261 |
|
|
19,993 |
|
|
19,993 |
|
Currency translation
reserve |
|
|
74 |
|
|
56 |
|
|
37 |
|
Accumulated losses
reserve |
|
|
(99,947 |
) |
|
(76,092 |
) |
|
(93,957 |
) |
Total equity / (deficit) |
|
|
55,880 |
|
|
42,542 |
|
|
(3,184 |
) |
* See Note 1 - ‘Basis of Accounting - Adoption
of IFRS 15 Revenue from contracts with
customers’.Consolidated Statement of Cash flows
(audited)
For the year ended 31 January 2019
|
|
Year ended 31 January 2019 |
|
Year ended 31 January 2019 |
|
Year ended 31 January 2018 |
|
|
|
|
|
|
(Adjusted*) |
|
|
$000s |
|
£000s |
|
£000s |
Cash flows from operating activities |
|
|
|
|
|
|
Profit / (loss) before
income tax |
|
6,608 |
|
|
5,031 |
|
|
(23,952 |
) |
|
|
6,608 |
|
|
5,031 |
|
|
(23,952 |
) |
Adjusted for: |
|
|
|
|
|
|
Gain on remeasurement
or derecognition of financial liabilities on funding
arrangements |
|
(708 |
) |
|
(539 |
) |
|
(908 |
) |
Loss on recognition of
contingent consideration payable |
|
990 |
|
|
754 |
|
|
— |
|
Finance income |
|
(3,662 |
) |
|
(2,788 |
) |
|
(3,096 |
) |
Finance costs |
|
557 |
|
|
424 |
|
|
1,164 |
|
Foreign exchange (gain)
/ loss |
|
(536 |
) |
|
(408 |
) |
|
1,960 |
|
Depreciation |
|
406 |
|
|
309 |
|
|
140 |
|
Amortisation of
intangible fixed assets |
|
1,089 |
|
|
829 |
|
|
106 |
|
Loss on disposal of
assets |
|
57 |
|
|
43 |
|
|
40 |
|
Movement in
provisions |
|
25 |
|
|
19 |
|
|
(60 |
) |
Research and
development expenditure credit |
|
(437 |
) |
|
(333 |
) |
|
(23 |
) |
Impairment of goodwill
and intangible assets |
|
5,234 |
|
|
3,985 |
|
|
— |
|
Share-based
payment |
|
6,230 |
|
|
4,743 |
|
|
1,607 |
|
Adjusted profit / (loss) from operations before changes in
working capital |
|
15,853 |
|
|
12,069 |
|
|
(23,022 |
) |
|
|
|
|
|
|
|
Increase in trade and
other receivables |
|
(2,913 |
) |
|
(2,218 |
) |
|
(8,993 |
) |
(Decrease) / increase
in deferred revenue |
|
(48,466 |
) |
|
(36,898 |
) |
|
10,577 |
|
Increase in trade and
other payables |
|
122 |
|
|
93 |
|
|
3,375 |
|
Cash used by operations |
|
(35,404 |
) |
|
(26,954 |
) |
|
(18,063 |
) |
Taxation received |
|
209 |
|
|
159 |
|
|
3,374 |
|
Net cash used by operating activities |
|
(35,195 |
) |
|
(26,795 |
) |
|
(14,689 |
) |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
Acquisition of
subsidiaries net of cash acquired |
|
— |
|
|
— |
|
|
(4,775 |
) |
Contingent
consideration paid |
|
(252 |
) |
|
(192 |
) |
|
— |
|
Purchase of property,
plant and equipment |
|
(156 |
) |
|
(119 |
) |
|
(360 |
) |
Purchase of intangible
assets |
|
(8 |
) |
|
(6 |
) |
|
(119 |
) |
Interest received |
|
5 |
|
|
4 |
|
|
12 |
|
Net cash used in investing activities |
|
(411 |
) |
|
(313 |
) |
|
(5,242 |
) |
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
Proceeds from issue of
share capital |
|
45,510 |
|
|
34,648 |
|
|
14,931 |
|
Transaction costs on
share capital issued |
|
(1,725 |
) |
|
(1,313 |
) |
|
(1,428 |
) |
Proceeds from exercise
of warrants |
|
— |
|
|
— |
|
|
10 |
|
Proceeds from exercise
of share options |
|
134 |
|
|
102 |
|
|
392 |
|
Net cash generated from financing activities |
|
43,919 |
|
|
33,437 |
|
|
13,905 |
|
|
|
|
|
|
|
|
Increase /
(decrease) in cash and cash equivalents |
|
8,313 |
|
|
6,329 |
|
|
(6,026 |
) |
Effect of
exchange rates in cash and cash equivalents |
|
561 |
|
|
427 |
|
|
(1,934 |
) |
Cash and cash
equivalents at beginning of the year |
|
26,404 |
|
|
20,102 |
|
|
28,062 |
|
Cash and cash equivalents at end of the year |
|
35,278 |
|
|
26,858 |
|
|
20,102 |
|
* See Note 1 - ‘Basis of Accounting - Adoption
of IFRS 15 Revenue from contracts with customers’.
Consolidated Statement of Changes in
Equity (audited) Year ended
31 January 2019
Group |
|
Share capital£000s |
|
Share premium account£000s |
|
Share-based payment reserve£000s |
|
Merger reserve£000s |
|
Special reserve£000s |
|
Currencytranslationreserve£000s |
|
Accumulated losses reserve£000s |
|
Total £000s |
At 1 February 2018 (as
previously reported) |
|
736 |
|
|
60,237 |
|
|
6,743 |
|
|
|
3,027 |
|
|
19,993 |
|
|
37 |
|
|
(80,898 |
) |
|
9,875 |
|
Change in accounting
policy (full retrospective application IFRS 15) |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
(13,059 |
) |
|
(13,059 |
) |
At 1 February 2018 (Adjusted*) |
|
736 |
|
|
60,237 |
|
|
6,743 |
|
|
|
3,027 |
|
|
19,993 |
|
|
37 |
|
|
(93,957 |
) |
|
(3,184 |
) |
Profit for the
year |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
7,527 |
|
|
7,527 |
|
Currency
translation adjustment |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
19 |
|
|
|
|
19 |
|
Total comprehensive
profit for the year |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
19 |
|
|
7,527 |
|
|
7,546 |
|
New share capital
issued |
|
864 |
|
|
33,784 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
34,648 |
|
Transaction costs on
share capital issued |
|
— |
|
|
(1,313 |
) |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,313 |
) |
Share options
exercised |
|
4 |
|
|
98 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
102 |
|
Share-based
payment |
|
— |
|
|
— |
|
|
4,743 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,743 |
|
Transfer |
|
— |
|
|
— |
|
|
(10,338 |
) |
|
|
— |
|
|
— |
|
|
— |
|
|
10,338 |
|
|
— |
|
At 31 January 2019 |
|
1,604 |
|
|
92,806 |
|
|
1,148 |
|
|
|
3,027 |
|
|
19,993 |
|
|
56 |
|
|
(76,092 |
) |
|
42,542 |
|
Year ended 31 January 2018
Group |
|
Share capital£000s |
|
Share premium account£000s |
|
Share-based payment reserve£000s |
|
Merger reserve£000s |
|
Special reserve£000s |
|
Currencytranslationreserve£000s |
|
Accumulated losses reserve£000s |
|
Total £000s |
At 1 February 2017 |
|
618 |
|
|
46,420 |
|
|
5,136 |
|
|
(1,943 |
) |
|
19,993 |
|
|
50 |
|
|
(73,767 |
) |
|
(3,493 |
) |
|
Loss for the year
(Adjusted*) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(20,190 |
) |
|
(20,190 |
) |
|
Currency
translation adjustment |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13 |
) |
|
— |
|
|
(13 |
) |
|
Total comprehensive
loss for the year (Adjusted*) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13 |
) |
|
(20,190 |
) |
|
(20,203 |
) |
|
New share capital
issued |
|
84 |
|
|
14,847 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14,931 |
|
|
Transaction costs on
share capital issued |
|
— |
|
|
(1,428 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,428 |
) |
|
Issue of ordinary
shares as consideration for a business combination |
|
30 |
|
|
— |
|
|
— |
|
|
4,970 |
|
|
— |
|
|
— |
|
|
— |
|
|
5,000 |
|
|
New share capital
issued from exercise of warrants |
|
1 |
|
|
9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10 |
|
|
Share options
exercised |
|
3 |
|
|
389 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
392 |
|
|
Share-based
payment |
|
— |
|
|
— |
|
|
1,607 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,607 |
|
|
At 31 January 2018 (Adjusted*) |
|
736 |
|
|
60,237 |
|
|
6,743 |
|
|
3,027 |
|
|
19,993 |
|
|
37 |
|
|
(93,957 |
) |
|
(3,184 |
) |
|
* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 15
Revenue from contracts with customers’.
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 January 2019
1. Basis of AccountingThis
financial information for the years ended 31 January 2019
and 31 January 2018 does not constitute the statutory financial
statements for the respective years within the meaning of Sections
434-436 of the Companies Act 2006 and is an extract from the
financial statements. It is based on, and is consistent with, the
Group’s statutory accounts for the year ended
31 January 2019 and those financial statements will be
delivered to the Registrar of Companies following the Company’s
2019 Annual General Meeting. Financial statements for the year
ended 31 January 2018 have been delivered to the Registrar of
Companies. The financial statements for the years ended
31 January 2019 and 2018 contain an unqualified report
from the Group’s auditors. The financial statements for the year to
31 January 2019 also contain a statement from the auditors drawing
shareholders’ attention to the Group’s need to raise additional
funds as noted below.
The Consolidated Financial Statements have been
prepared in accordance with International Financial Reporting
Standards ('IFRS') and International Financial Reporting
Interpretations Committee (‘IFRIC’) interpretations as issued by
the International Accounting Standards Board and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS.
There have been no changes to the accounting
policies as contained in the annual consolidated financial
statements as of and for the year ended 31 January 2019
other than as described below.
The financial information in these financial
statements has been prepared assuming the Group will continue on a
going concern basis. Based on management's forecasts, the Group's
existing cash and cash equivalents, anticipated payments from BARDA
under its contract for the development of ridinilazole, anticipated
payments from CARB-X under its contract for the development of its
gonorrhoea antibiotic candidate, and anticipated payments from the
cost-sharing arrangement under its licence and collaboration
agreement with Sarepta are expected to be sufficient to enable the
Group to fund its operating expenses and capital expenditure
requirements through 31 January 2020. The Group will need to raise
additional funding in order to support, beyond this date, its
planned research and development efforts, potential
commercialisation related activities, if any of its product
candidates receive marketing approval, as well as to support
activities associated with operating as a public company in the
United States and the United Kingdom. Should the Group be unable to
raise additional funding, management has the ability to take
mitigating action to fund its operating expenses and capital
expenditure requirements in relation to its clinical development
activities for only a short period beyond 12 months from the date
of issuance of these financial statements. These circumstances
represent a material uncertainty which may cast and
raise significant doubt on the Group’s ability to continue as
a going concern. These financial statements do not contain any
adjustments that might result if the Group was unable to continue
as a going concern.
The Group is evaluating various options to
finance its cash needs through a combination of some, or all, of
the following: equity offerings, collaborations, strategic
alliances, grants and clinical trial support from government
entities, philanthropic, non-government and not-for-profit
organisations and patient advocacy groups, debt financings, and
marketing, distribution or licensing arrangements. Whilst the Group
believes that funds would be available in this manner before the
end of January 2020, there can be no assurance that the Group will
be able to generate funds, on terms acceptable to the Group, on a
timely basis or at all, which would impact the Group’s ability to
continue as a going concern. The failure of the Group to obtain
sufficient funds on acceptable terms when needed could have a
material adverse effect on the Group’s business, results of
operations and financial condition.
This announcement is available from the Company Secretary and is
on the Company’s website.
The financial information for the three-month
periods ended 31 January 2019 and 2018 are unaudited.
Solely for the convenience of the reader, unless
otherwise indicated, all pound sterling amounts stated in the
Consolidated Statement of Financial Position as at
31 January 2019 and the Consolidated Statement of
Comprehensive Income and Consolidated Statement of Cash Flows for
the year and three months ended 31 January 2019 have been
translated into US dollars at the rate on 31 January 2019
of $1.3135 to £1.00. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into US dollars at that or any other exchange
rate as at that or any other date.
The Board of Directors of the Company approved
this statement on 27 March 2019.
Adoption of IFRS 15 Revenue from
contracts with customers
IFRS 15 establishes comprehensive guidelines for
determining when to recognise revenue and how much revenue to
recognise. The Group adopted this new standard effective 1 February
2018 as required, using the full retrospective transition method in
accordance with IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors.
The core principle in that framework is that a
company should recognise revenue to depict the transfer of control
of promised goods or services to the customer in an amount that
reflects the consideration to which the company expects to be
entitled in exchange for those goods or services. To determine
revenue recognition for arrangements that a company determines are
within the scope of IFRS 15, a company performs the following five
steps: (i) identify the contract(s) with a customer; (ii) identify
the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the
performance obligations in the contract; and (v) recognise revenue
when (or as) the company satisfies a performance obligation.
The Group assessed the effect of adoption of
this standard as it relates to the licence and collaboration
agreement with Sarepta (the 'Sarepta Agreement') and the licence
and commercialisation agreement with Eurofarma (the 'Eurofarma
Agreement').
The Sarepta Agreement and the Eurofarma
Agreement grant the rights in specific territories to commercialise
products in the Group’s utrophin modulator pipeline and
ridinilazole, respectively, as well as the provision of the
associated research and development activities. Such activities
result in a service that is the output of the Group’s ordinary
activities. The Group assessed that the revenues from these
agreements are in the scope of IFRS 15.
For both of these agreements, the Group assessed
that the licence to commercialise the Group’s intellectual property
is not distinct in the context of the contract and that there is a
transformational relationship between the licence and the research
and development activities delivered as they are highly
interrelated elements of the contract. The Group therefore
determined that there is one single performance obligation under
IFRS 15 in relation to the licence granted and the research and
development activities, which is the transfer of a licence for
which the associated research and development activities are
completed over time. The transaction price of these agreements
includes upfront payments, development and regulatory milestone
payments, development cost share income, sales milestones and
sales-based royalties. Milestone payments are included in the
transaction price only when it becomes highly probable that a
significant reversal in the amount of cumulative revenue recognised
will not occur. The relevant transaction price elements are
allocated to the performance obligation identified being the
transfer of a licence for which the associated research and
development activities are completed over time. The revenues are
recognised over the development period using an output method based
on time elapsed, reflecting both the increase in value of the
licence and the progression of the research and development
activities over the development period towards potential
commercialisation of the product. Sales milestones and sales-based
royalties are not included in the Group’s revenues when the
associated clinical programme is still in development. The
predominant element of the performance obligation that the sales
milestones and sales-based royalties relate to is the licence
granted and hence the revenues are recognised when the related
sales occur.
The Sarepta Agreement also has a number of
further performance obligations, including research and clinical
development activities relating to the future generation small
molecule utrophin modulators and the licence granted to
commercialise in Latin America, which is at the option of Sarepta.
The development, regulatory and sales milestone payments allocated
to the future generation candidate activities and Latin America
licence granted are contingent on future activities, and, as a
result, would only be included in the transaction price and
accounted for as revenue when it would be highly probable that a
significant reversal in the amount of cumulative revenue recognised
would not occur. The relevant sales-based royalties would be
recognised when the related sales occur, as the licence granted is
the predominant element of the performance obligation. The
development cost share income allocated to clinical trial wind-down
activities, which is also a separate performance obligation within
the Sarepta agreement, are recognised using an input method based
on costs incurred.
Due to the adoption of IFRS 15, the $22.0
million (£17.2 million) development milestone payment the Group
received in May 2017 as part of the Sarepta Agreement, which had
previously been recognised in full under IAS 18 during the Group's
fiscal year ended 31 January 2018, was recognised as revenue over
the development period. Similarly, development cost share income
from Sarepta which commenced from 1 January 2018 under the
agreement was recognised over the development period. As a result
of this change, £13.1 million of income related to the Sarepta
Agreement previously recognised as revenue during the year ended 31
January 2018 was classified as deferred revenue in the opening
Statement of Financial Position as at 1 February 2018. This
adjustment consisted of (i) £12.4 million related to the
development milestone payment; and (ii) £0.7 million related to
development cost share income related to Sarepta’s share of
research and development costs incurred in January 2018 (the first
month that the cost share component of the agreement was in
effect).
In June 2018, the Group announced the
discontinuation of the development of ezutromid after its Phase 2
clinical trial, PhaseOut DMD, did not meet its primary or secondary
endpoints. As a result, the Group updated the development period
over which the Sarepta revenues allocated to the licence and the
research and development activities performance obligation were
recognised, with the development period deemed to have concluded in
June 2018 in line with when development of ezutromid was
discontinued. This resulted in all revenues relating to the Sarepta
Agreement that were previously deferred in the Statement of
Financial Position being released in full during the year ended 31
January 2019. The Group continues to receive cost share income from
Sarepta, at 45% of eligible costs, including for wind-down
activities for the ezutromid clinical trial. This cost share income
is recognised as revenue when such costs are incurred. The Group
does not expect to receive any further milestone payments from
Sarepta.
The Group’s assessment resulted in there being
no difference in the accounting treatment of the Eurofarma
Agreement under IAS 18 and IFRS 15. Revenues recognised relating to
the agreement during the year ended 31 January 2018 under IAS 18
related only to the upfront payment, which was initially reported
as deferred revenue in the Statement of Financial Position and is
being recognised as revenue over the development period. This is
consistent with the accounting treatment under IFRS 15.
This change in accounting policy has been
reflected retrospectively in the comparative Statement of Financial
Position, the comparative Statement of Comprehensive Income, the
comparative Statement of Cash Flows and the comparative Statement
of Changes in Equity for the year ended 31 January 2018.
The opening Statement of Financial Position as at 1 February 2017
is in line with comparative amounts disclosed in the financial
statements for the year ended 31 January 2017, as there was no
impact of this change in accounting policy on the Statement of
Financial Position as at 31 January 2017.
The impact of this change in accounting policy
on the comparatives to these financial statements was an increase
in non-current and current deferred revenue, an increase in
accumulated losses reserve, a reduction in revenue historically
recognised, and a presentational change to the Statement of Cash
Flows. The increase in non-current and current deferred revenue for
the year ended 31 January 2018 and reduction in revenue recognised
during the year ended 31 January 2018, relate to the
difference between the accounting treatment of the Sarepta
development milestone payment and development cost share income
under IAS 18 and IFRS 15, as described above, which is recognised
as revenue over the remainder of the determined development
period.
Impact on
Consolidated |
OriginalYear ended 31 January
2018 |
|
AdjustedYear ended 31 January
2018 |
|
Impact |
Statement of Financial Position |
£000s |
|
£000s |
|
£000s |
Non-current liabilities |
|
|
|
|
|
Deferred revenue |
(18,033 |
) |
|
(27,270 |
) |
|
(9,237 |
) |
Current liabilities |
|
|
|
|
|
Deferred revenue |
(10,012 |
) |
|
(13,834 |
) |
|
(3,822 |
) |
Equity |
|
|
|
|
|
Accumulated losses reserve |
(80,898 |
) |
|
(93,957 |
) |
|
(13,059 |
) |
Impact on
Consolidated |
Original Year ended 31 January
2018 |
Adjusted Year ended 31 January
2018 |
Impact |
Statement of Comprehensive Income |
£000s |
£000s |
£000s |
Revenue |
25,419 |
|
|
12,360 |
|
|
(13,059 |
) |
|
Loss for the year |
(7,131 |
) |
|
(20,190 |
) |
|
(13,059 |
) |
|
Impact on
Consolidated |
Original Year ended 31 January
2018 |
Adjusted Year ended 31 January
2018 |
Impact |
Statement of Cash Flows |
£000s |
£000s |
£000s |
Loss
before income tax |
(10,893 |
) |
|
(23,952 |
) |
|
(13,059 |
) |
|
Adjusted for: |
|
|
|
(Decrease) / increase
in deferred revenue |
(2,482 |
) |
|
10,577 |
|
|
13,059 |
|
|
Impact on net cash used by operating
activities |
(13,375 |
) |
|
(13,375 |
) |
|
— |
|
|
The Group will continue to monitor
interpretations released by the IFRS Interpretations Committee and
amendments to IFRS 15 and, as appropriate, will adopt these from
the effective dates.
2. Earnings / (Loss) per Share Calculation
The calculation of earnings / (loss) per share
is based on the following data:
|
|
Three months ended 31 January
2019 |
|
Three months ended 31 January 2018 |
|
Year ended 31 January 2019 |
|
Year ended 31 January 2018 |
|
|
|
|
(Adjusted*) |
|
|
|
(Adjusted*) |
|
|
000s |
|
000s |
|
000s |
|
000s |
(Loss) / profit
for the period / year |
£ |
(5,159 |
) |
£ |
(11,283 |
) |
£ |
7,527 |
£ |
(20,190 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares for basic (loss) / earnings per
share |
|
101,796 |
|
|
71,887 |
|
|
85,702 |
|
65,434 |
|
Effect of
dilutive potential ordinary shares (share options and
warrants) |
|
— |
|
|
— |
|
|
442 |
|
— |
|
Weighted
average number of ordinary shares for diluted earnings per
share |
|
101,796 |
|
|
71,887 |
|
|
86,144 |
|
65,434 |
|
|
|
|
|
|
|
|
|
|
Basic (loss) / earnings per ordinary share from operations
£ |
|
(0.05 |
) |
|
(0.16 |
) |
|
0.09 |
|
(0.31 |
) |
Diluted (loss) / earnings per ordinary share from
operations £ |
|
(0.05 |
) |
|
(0.16 |
) |
|
0.09 |
|
(0.31 |
) |
* See Note 1 - ‘Basis of Accounting - Adoption
of IFRS 15 Revenue from contracts with customers’.
Basic earnings / (loss) per ordinary share has
been calculated by dividing the profit / (loss) for the three
months and year ended 31 January 2019 by the weighted average
number of shares in issue during the three months and year ended 31
January 2019. Diluted earnings per ordinary share has been
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all potentially dilutive
ordinary shares. Potentially dilutive ordinary shares are the
number of shares that could have been acquired at fair value based
on the monetary value of the subscription rights attached to share
options in-the-money compared with the number of shares that would
have been issued assuming the exercise of share options
in-the-money.At 31 January 2019, total outstanding share options
were 9,168,396 and total outstanding Restricted Stock Units
(‘RSUs’) were 814,256. Of these equity instruments, 8,094,227 were
not included in the calculation of potentially dilutive ordinary
shares for the year ended 31 January 2019 as they are not
dilutive.IAS 33 ‘Earnings per Share’ requires the presentation of
diluted earnings per share where a company could be called upon to
issue shares that would decrease net profit or loss per share. As
the Group reported net losses for the three months ended 31 January
2019 and 31 January 2018 and the year ended 31 January 2018, the
weighted average number of ordinary shares outstanding used to
calculate the diluted earnings / (loss) per ordinary share is the
same as that used to calculate the basic earnings / (loss) per
ordinary share, as the exercise of share options would have the
effect of reducing loss per ordinary share which is not
dilutive.
3. Issue of Share Capital
On 29 March 2018, the Company completed an
equity placing on the AIM market of the London Stock Exchange,
issuing 8,333,333 new ordinary shares at a price of 180 pence per
share. Total gross proceeds of £15.0 million were raised and
directly attributable transaction costs of £0.9 million were
incurred and accounted for as a deduction from equity.
On 9 January 2019, the Company completed a
private placement of 15,625,000 American Depository Shares ('ADS')
at a price of $1.60 per ADS. Each ADS represents five ordinary
shares of one penny nominal value each in the capital of the
Company, meaning 78,125,000 new ordinary shares were issued. Total
gross proceeds of $25.0 million (£19.6 million) were raised and
directly attributable transaction costs of £0.4 million were
incurred.
During the year ended 31 January 2019, the following
exercises of share options and Restricted Stock Units ('RSUs') took
place:
Date |
Number of options exercised |
16
March 2018 |
4,216 |
18
April 2018 |
38,850 |
23
April 2018 |
48,981 |
18
July 2018 |
136,991 |
24 October 2018 |
138,886 |
|
367,924 |
The total net proceeds from exercised share
options and RSUs during the year ended 31 January 2019
was £0.1 million.
All new ordinary shares rank pari passu with
existing ordinary shares.
As of 31 January 2019, the number of
ordinary shares in issue was 160,389,881.
-END-
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