TIDMSNG
RNS Number : 9350Q
Synairgen plc
25 February 2019
Press release
Synairgen plc
('Synairgen' or the 'Company')
Preliminary statement of results for the year ended 31 December
2018
Southampton, UK - 25 February 2019: Synairgen (LSE: SNG), the
respiratory drug discovery and development company, today announces
its preliminary statement of audited results for the year ended 31
December 2018.
Operational highlights - including post period end
-- Successfully advanced inhaled interferon beta (IFN-beta)
programme into the clinic for the treatment or prevention of
virally-induced COPD exacerbations
-- Part 1 of SG015 clinical trial completed, showing that SNG001
was well tolerated and that antiviral biomarker analysis showed
COPD patients (without viral infection) inhaling SNG001 had
significantly increased antiviral activity in the lungs
-- Raised GBP2.7 million (net of expenses) in October 2018 to
increase the scope of our inhaled IFN-beta clinical trial,
enhancing our business development opportunity for the COPD
programme
-- Part 2 of SG015 trial commenced with 13 trial sites now active
-- Our Australian partner, Pharmaxis, has satisfactorily
completed Phase I trials and 3 month toxicology for 2 compounds,
enabling it to progress the next strategic steps of the LOXL2
inhibitor programme
Financial highlights
-- Revenues for the year were GBP0.11 million (2017: GBP5.03
million, which included a non-recurring GBP5 million upfront
payable by Pharmaxis)
-- Research and development expenditure for the year was GBP3.23
million (2017: GBP2.06 million) reflecting investment in the
development of the IFN-beta programme
-- Loss from operations for the year ended 31 December 2018 was
GBP4.13 million (2017: profit of GBP1.62 million)
-- Cash, cash equivalents and deposit balances of GBP5.33
million at 31 December 2018 (2017: GBP6.85 million). The Group
remains debt free
Commenting on the Annual Results, Simon Shaw, Chairman of
Synairgen said: "2018 was a year of excellent operational progress
for Synairgen. We were particularly pleased to advance our inhaled
IFN-beta programme into a clinical trial to treat or prevent
exacerbations of COPD and to increase the scope of the trial to
support future partnering activity. We were also pleased that our
partner Pharmaxis announced completion of the three-month
toxicology studies and await further steps in the advancement of
this opportunity. We look forward to continued progress in
2019."
- Ends -
This announcement contains inside information as contained in
Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR").
For further enquiries, please contact:
Synairgen plc
Richard Marsden, Chief Executive Officer
John Ward, Finance Director
Tel: + 44 (0) 23 8051 2800
finnCap
Geoff Nash, Max Bullen-Smith (Corporate Finance)
Alice Lane (Corporate Broking)
Tel: + 44 (0) 20 7220 0500
Consilium Strategic Communications (Financial Media and
Investor
Relations)
Mary-Jane Elliott / Sue Stuart / Olivia Manser
synairgen@consilium-comms.com
Tel: +44 (0) 20 3709 5701
Notes for Editors
About Synairgen
Synairgen is a respiratory drug discovery and development
company founded by University of Southampton Professors Stephen
Holgate, Donna Davies and Ratko Djukanovic. The business, focused
primarily on asthma and COPD, uses its differentiating human
biology BioBank platform and world-renowned international academic
KOL network to discover and develop novel therapies for respiratory
disease. Leveraging its scientific and clinical facilities at
Southampton General Hospital, the Company uses in vitro and ex vivo
models to progress opportunities into clinical development. The
BioBank of human samples is used in these models to increase
confidence in the likelihood of successful drug development.
Synairgen is currently conducting a two-part Phase II trial
evaluating SNG001, the Company's inhaled interferon beta (IFN-beta)
product. The Phase II trial, called SG015, has been designed to
assess the safety of SNG001 in COPD patients and its clinical
benefit in these patients when they have a cold or flu infection, a
major driver of COPD exacerbations.
Core to Synairgen's business strategy is the realisation of
value via licensing transactions. In August 2015 the Company
entered into a collaboration with Pharmaxis to develop an oral
LOXL2 inhibitor to reduce fibrosis in patients with idiopathic
pulmonary fibrosis (IPF). In December 2017, the collaboration
agreement was amended as Pharmaxis took on full responsibility for
the programme, with Synairgen receiving a GBP5 million upfront
payment and a share of at least 17% (net of allowable expenses) of
any receipts from any onward licensing by Pharmaxis of the LOXL2
inhibitors in fibrotic indications.
Synairgen is quoted on AIM (LSE: SNG). For more information
about Synairgen, please see www.synairgen.com
Chairman's and Chief Executive Officer's Review
Operating Review
Summary
2018 has been a year of excellent operational progress. We
successfully advanced our inhaled interferon beta (IFN-beta)
programme, to treat or prevent COPD exacerbations, into the clinic
and, in September 2018, we raised GBP2.7 million (net of costs) to
expand the number of patients to be included in our clinical trial,
to increase the power of the study and enhance our chance of
partnering our inhaled IFN-beta programme for COPD. In addition,
our Australian partner, Pharmaxis, has completed Phase I clinical
trials for the LOXL2 inhibitor programme with positive results and
we now eagerly await the next steps for this product where
Synairgen has a significant financial interest in its success.
Inhaled interferon beta programme
Inhaled IFN-beta progression in COPD to treat or prevent
virus-induced exacerbations
We have progressed inhaled IFN-beta into COPD, where the risk
that a patient will exacerbate due to a cold infection is much
higher (approximately 50%(1) ) compared to asthma (<10%(2) ),
with some identifiable sub-groups at higher risk than others.(3)
The cost to both patient and healthcare providers of virus-induced
COPD exacerbations is also substantial - in England alone, COPD is
the second most common cause of unplanned hospitalisations after
cardiovascular disease.(4)
We have long known that COPD represents a very substantial
market for inhaled IFN-beta, addressing a large number of patients
who are expensive to treat. The historical barrier to progressing
into COPD was the complexity around identifying the virus-positive
patients for treatment. COPD patients can suffer from bacterial
infections as well as viral infections and, up until recently,
distinguishing between viral and bacterial infections, at the point
of assessment, was too great an obstacle to allow progression of
inhaled IFN-beta into COPD clinical trials.
Our ability to progress with COPD has been enabled by the
availability of a novel point of care test launched by bioMérieux.
This test confirms the presence of a respiratory virus in a patient
within 45 minutes of a nasal or throat swab being taken.
Utilisation of this new diagnostic test means that we can be sure
that every patient we treat in the COPD trial is virus positive.
This will eliminate the background "noise" associated with the
inclusion of patients with no viral infection in the trial and
thereby reduce the required trial size, and therefore cost, to
obtain meaningful results.
We are starting treatment at the onset of respiratory symptoms
in virus-positive patients. At the moment, COPD patients are not
encouraged to visit their GP/pulmonologist if they have a cold.
This is because there are no broad spectrum antiviral therapeutic
options available to limit the spread of virus to the lungs. The
advent of this new diagnostic technology changes this paradigm. The
bioMérieux point of care test enables rapid identification of
common bacterial and viral pathogens. For the virus-positive
patients, the availability of an antiviral therapy with the
potential to either prevent exacerbations, or to limit their
severity, would be a major breakthrough.
In Q1 2018 we commenced a two-part Phase II clinical trial in
COPD patients.
Part 1 of Phase II trial
The first part of the trial was conducted to confirm the safety
of inhaled IFN-beta in this patient population. Inhaled IFN-beta
has been well tolerated in all of the asthma trials; COPD patients'
lungs are different and it was necessary to assess safety prior to
dosing patients in part two of the trial. Our target patients have
typically lost approximately 40% of their lung function, their
lungs are often colonised by bacteria, and their lung inflammation
is driven by different factors than in asthma. During this first
phase, we were pleased to ascertain that inhaled IFN-beta was well
tolerated in COPD patients. We also undertook a biomarker
assessment. Patients in this part of the trial were free of viral
infection and inhalation of IFN-beta should activate their
antiviral defences. Indeed, as reported in June 2018, the antiviral
biomarkers assessed 24 hours after administration of a dose of
inhaled IFN-beta were elevated. This increase in relevant
biomarkers was very similar to that which we had observed in
asthma. We were particularly pleased to see firstly, the robust
antiviral response in these older patients' lungs that have
typically been exposed to many years of cigarette smoke, and
secondly, that this effect mirrored in vitro findings in COPD
patients' lung cells from our models where IFN-beta is
effective.
Part 2 of Phase II trial
Completion of part one enabled the commencement of part two of
the trial. In part two, COPD patients without infection are
screened and entered into a waiting phase. We are building this
pool of 'waiting patients' to approximately 200 patients. Patients
then contact the trial site as soon as they develop a cold or COPD
symptoms which are suspected to be caused by a virus. Upon arrival
at the trial site, patients are tested to determine whether they
have a respiratory virus; those that are positive are treated with
either inhaled IFN-beta or placebo for 14 days.
In October 2018 we completed a placing which raised GBP2.7
million (net of costs), primarily to increase the COPD trial size
from 80 patients to 120 patients in order to be able to focus on
clinical endpoints, to enhance the chance of obtaining a positive
result, and ultimately to partner the programme when the trial is
completed.
The trial is progressing well and we have now initiated 13 trial
sites, all in the UK. As at 15 February 2019, 181 patients have
been screened and 133 patients have been entered into the 'pool',
waiting to develop virus symptoms, ahead of the confirmatory virus
testing. In the first three months of the trial (up to 11 January),
22 patients developed symptoms and were tested for a respiratory
virus; 3 out of the 22 tested positive and were subsequently dosed.
This reflected the mild start to the respiratory virus season as
reported by Public Health England (PHE). In the subsequent five
weeks to 15 February, PHE reported an uplift in influenza like
illness (an indication of the impact of respiratory viruses on
healthcare system) and this has been reflected in an uplift in the
number of patients dosed in our trial. Since 11 January a further
30 patients have been tested, of whom 15 were virus positive and
dosed. The virus test has therefore proved its value, particularly
during the late autumn and early winter, screening out patients
who, historically, may have been dosed based on their symptoms, but
who had no potential to gain from an antiviral. The following
viruses have been detected: enterovirus/rhinovirus; RSV;
coronavirus; human metapneumovirus; and influenza. The milder start
to this virus season means that we now expect the trial to continue
into the 2019/2020 virus season.
Size of market opportunity
COPD is a common disease which consumes substantial healthcare
resources, particularly in the non-summer months. COPD patients
will typically have one to two colds per year. Each cold carries a
risk of exacerbation of approximately 50%. In the USA, the average
cost of a hospitalisation following a visit to the Emergency
Department for a COPD patient is $29,000.(5) Pathogen testing at
the onset of an exacerbation is being recommended to reduce
unnecessary antibiotic prescribing for viral exacerbations. The
need for a broad spectrum antiviral therapy is substantial. We
expect considerable interest from potential partners for this
programme and have commenced a dialogue with several large pharma
companies.
LOXL2 inhibitor programme
In collaboration with Pharmaxis we identified and progressed a
LOXL2 inhibitors programme from the pre-clinical stage through to
commencement of a Phase I clinical trial. Initially the
collaboration was focussed on idiopathic pulmonary fibrosis (IPF),
an area of expertise for Synairgen.
Over the two years of the collaboration, our interactions with
potential large pharma partners led to an expansion of the
programme to also embrace other fibrotic diseases, including
non-alcoholic steatohepatitis (NASH, a type of liver fibrosis),
heart fibrosis, and kidney fibrosis. In December 2017 we elected to
pass responsibility for the further development and
commercialisation of these compounds to Pharmaxis, who were better
placed to conduct research in the non-lung fibrotic arena, in
return for GBP5 million and a share of at least 17% (net of
allowable expenses) of any receipts from any onward licensing by
Pharmaxis of the LOXL2 inhibitors in fibrotic indications.
During 2018, Pharmaxis successfully completed Phase I trials for
two compounds, and showed best in class inhibition of the LOXL2
enzyme in these clinical trials. Post period-end (17 January 2019),
Pharmaxis announced that the 3 month toxicology studies had been
successfully completed for both compounds, allowing them to
progress the next strategic steps for the programme. We continue to
track Pharmaxis' progress with great interest.
Financial Review
Statement of Comprehensive Income
The loss from operations for the year ended 31 December 2018 was
GBP4.13 million (2017: profit GBP1.62 million). Revenues for the
year amounted to GBP0.11 million (2017: GBP5.03 million). 2017
included a non-recurring GBP5 million payable by Pharmaxis as
consideration for the change in collaboration terms. The 2018
revenue comprised fee for service work in relation to the LOXL2
programme. Research and development expenditure for the year
amounted to GBP3.23 million (2017: GBP2.06 million), and was
focussed almost entirely on the IFN-beta Phase II clinical trial in
COPD and associated pharmaceutical development costs.
Other administrative costs for the year amounted to GBP1.01
million (2017: GBP1.35 million), with the decrease being
attributable to lower staff bonus costs and reduced legal costs.
Interest receivable increased on account of higher average cash
balances held and the increase in base rate. The tax credit
increased from GBP0.13 million in 2017 to GBP0.80 million in 2018.
The 2017 credit was at lower levels than preceding years because
the Group was in profit and this limited the amount of research and
development tax credit which could be claimed. The loss after tax
for 2018 was GBP3.30 million (2017: profit of GBP1.76 million) and
the basic loss per share amounted to 3.47p (2017: basic earnings
per share of 1.93p).
Statement of Financial Position and cash flows
At 31 December 2018, net assets amounted to GBP6.03 million
(2017: GBP6.56 million), including cash and bank deposits of
GBP5.33 million (2017: GBP6.84 million).
The principal elements of the GBP1.51 million decrease over the
year ended 31 December 2018 (2017: GBP2.08 million increase) in
cash and bank deposits were:
-- Cash used in operations: GBP3.89 million (2017: GBP1.45 million generated from operations);
-- Research and development tax credits received: GBP0.07 million (2017: GBP0.62 million);
-- Capital expenditure on property, plant and equipment: GBP0.39
million (2017: GBP0.01 million); and
-- Share issue proceeds (net of costs): GBP2.67 million (2017: GBPnil).
The other significant changes in the statement of financial
position were:
-- The net book value of property, plant and equipment increased
from GBP0.01 million to GBP0.37 million at 31 December 2018. This
was due to the purchase of 13 bioMérieux multiplex PCR virus
detection machines (one for each clinical trial site) at a total
cost of GBP0.36 million. The remainder of the capital expenditure
was for laboratory and IT equipment;
-- Current tax receivable increased from GBP0.07 million to
GBP0.80 million on account of the higher R&D tax credit as
discussed above;
-- Trade and other receivables decreased from GBP0.63 million to
GBP0.22 million on account of amounts receivable from Pharmaxis
reducing by some GBP0.45 million;
-- Trade and other payables decreased from GBP1.10 million to
GBP0.78 million. The major driver behind this reduction is the lack
of bonus accrual at 31 December 2018; and
-- Share capital and share premium increased from GBP0.91
million and GBP25.77 million to GBP1.09 million and GBP28.26
million respectively, an aggregate increase of GBP2.67 million on
account of the fundraising in October 2018 whereby 18.00 million
shares of 1p each were issued at a premium of 15p primarily to fund
the enlarged Phase II trial. Costs of the issue amounted to GBP0.21
million, which were taken to the share premium account.
Outlook
Operationally we are wholly focussed on our inhaled IFN-beta
programme in COPD and engaging with potential partners for this
programme in advance of Phase II data availability. We are pleased
that Pharmaxis have announced completion of the three month
toxicology studies which were necessary to progress partnering
discussions in disease areas which are of great interest to large
pharma. We continue to assess new opportunities to complement our
existing COPD programme.
References
1. Johnston NW, et al. Colds as predictors of the onset and
severity of COPD exacerbations International Journal of COPD
2017:12: 839-848
2. (i) Aviragen Therapeutics presentation Directing Next
Generation Direct-Acting Antivirals May 2017. (ii) Synairgen
analysis of INEXAS trial results, dated 27 September 2017
(https://www.synairgen.com/wp-content/uploads/2018/06/ifnb-press-release-final-26-sept-002.pdf)
3. Wilkinson TMA, et al. A prospective, observational cohort
study of the seasonal dynamics of airway pathogens in the aetiology
of exacerbations in COPD Thorax 2017;0:1-9.
Doi:10.1136/thoraxjnl=2016-209023
4. Department of Health. An Outcomes Strategy for Chronic
Obstructive Pulmonary Disease (COPD) and Asthma in England.
Published July 2011
5. Singh JA, et al. Utilization due to chronic obstructive
pulmonary disease and its predictors: a study using the U.S.
National Emergency Department Sample (NEDS). Respiratory Research
2016; 17:1
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2018
Year Year
ended 31 ended 31
December December
2018 2017
Notes GBP000 GBP000
Revenue 105 5,025
Research and development expenditure (3,232) (2,061)
Other administrative expenses (1,005) (1,349)
-------------------------------------------- ------ ------------------- ---------------------
Total administrative expenses (4,237) (3,410)
(Loss)/Profit from operations (4,132) 1,615
Finance income 36 14
(Loss)/Profit before tax (4,096) 1,629
Tax 2 795 132
(Loss)/Profit and total comprehensive
(loss)/income for the period attributable
to equity holders of the parent (3,301) 1,761
=================== =====================
(Loss)/Earnings per ordinary share 3
Basic (loss)/earnings per share
(pence) (3.47)p 1.93p
Diluted (loss)/earnings per share
(pence) (3.47)p 1.87p
Consolidated Statement of Changes in Equity
for the year ended 31 December 2018
Share Share Merger Retained
capital premium reserve deficit Total
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2017 914 25,771 483 (22,483) 4,685
Recognition of share-based
payments - - - 113 113
Profit and total comprehensive
income for the year - - - 1,761 1,761
-------- ------------ -------- -------- ---------
At 31 December 2017 914 25,771 483 (20,609) 6,559
Issue of ordinary shares 180 2,700 - - 2,880
Transaction costs in respect
of share issue - (209) - - (209)
Recognition of share-based
payments - - - 98 98
Loss and total comprehensive
loss for the year - - - (3,301) (3,301)
-------- ------------ -------- -------- ---------
At 31 December 2018 1,094 28,262 483 (23,812) 6,027
======== ============ ======== ======== =========
Consolidated Statement of Financial Position
as at 31 December 2018
31 December 31 December
2018 2017
GBP000 GBP000
Assets
Non-current assets
Intangible assets 29 45
Property, plant and equipment 374 12
-------------- ------------
403 57
-------------- ------------
Current assets
Inventories 56 56
Current tax receivable 795 71
Trade and other receivables 216 633
Other financial assets - bank
deposits 50 2,000
Cash and cash equivalents 5,284 4,845
-------------- ------------
6,401 7,605
Total assets 6,804 7,662
-------------- ------------
Liabilities
Current liabilities
Trade and other payables (777) (1,103)
-------------- ------------
Total liabilities (777) (1,103)
-------------- ------------
Total net assets 6,027 6,559
============== ============
Equity
Capital and reserves attributable
to equity holders of the parent
Share capital 1,094 914
Share premium 28,262 25,771
Merger reserve 483 483
Retained deficit (23,812) (20,609)
-------------- ------------
Total equity 6,027 6,559
============== ============
Consolidated Statement of Cash Flows
for the year ended 31 December 2018
Year Year
ended 31 ended 31
December December
2018 2017
GBP000 GBP000
Cash flows from operating activities
(Loss)/Profit before tax (4,096) 1,629
Adjustments for:
Finance income (36) (14)
Depreciation 24 7
Amortisation 16 17
Share-based payment charge 98 113
--------- ---------
Cash flows from operations before changes
in working capital (3,994) 1,752
Increase in inventories - (1)
Decrease/(Increase) in trade and other
receivables 426 (548)
(Decrease)/Increase in trade and other
payables (326) 243
--------- ---------
Cash (used in)/generated from operations (3,894) 1,446
Tax credit received 71 621
--------- ---------
Net cash (used in)/generated from operating
activities (3,823) 2,067
--------- ---------
Cash flows from investing activities
Interest received 27 19
Purchase of property, plant and equipment (386) (6)
Decrease/(Increase) in other financial
assets 1,950 (339)
--------- ---------
Net cash generated from/(used in) investing
activities 1,591 (326)
--------- ---------
Cash flows from financing activities
Proceeds from issuance of ordinary shares 2,880 -
Transaction costs in respect of share
issue (209) -
Net cash generated from financing activities 2,671 -
--------- ---------
Increase in cash and cash equivalents 439 1,741
Cash and cash equivalents at beginning
of the year 4,845 3,104
--------- ---------
Cash and cash equivalents at end of the
year 5,284 4,845
========= =========
Notes
1. Basis of preparation
The financial information of the Group set out above does not
constitute "statutory accounts" for the purposes of Section 435 of
the Companies Act 2006. The financial information for the year
ended 31 December 2018 has been extracted from the Group's audited
financial statements which were approved by the Board of directors
on 22 February 2019 and will be delivered to the Registrar of
Companies for England and Wales in due course. The financial
information for the year ended 31 December 2017 has been extracted
from the Group's audited financial statements for that period which
have been delivered to the Registrar of Companies for England and
Wales. The reports of the auditors on both these financial
statements were unqualified, did not include any references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under Section 498(2) or Section 498(3) of the Companies Act 2006.
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International
Financial Reporting Standards ('IFRSs') as adopted by the
European Union, this announcement does not itself contain
sufficient information to comply with those IFRSs. This financial
information has been prepared in accordance with the accounting
policies set out in the December 2018 report and financial
statements.
2. Tax
The tax credit of GBP795,000 (2017: GBP132,000) relates to
research and development tax credits in respect of the year ended
31 December 2018.
3. (Loss)/Earnings per ordinary share
Basic (loss)/earnings per share ('LPS' or 'EPS') is calculated
by dividing the (loss)/profit attributable to ordinary equity
holders of the parent company by the weighted average number of
ordinary shares in issue during the year.
For diluted earnings per share, the weighted number of ordinary
shares in issue is adjusted to assume conversion of dilutive
potential ordinary shares, being share options where the exercise
price is less than the average market price of the Company's
ordinary shares during the year and where performance conditions
have been met or, in the case of options where the performance
period is not completed, are being met.
Where there is a loss (as for the year ended 31 December 2018),
the loss attributable to ordinary shareholders and weighted average
number of ordinary shares for the purpose of calculating the
diluted earnings per ordinary share are identical to those used for
basic loss per share. This is because the exercise of share options
would have the effect of reducing the loss per ordinary share and
is therefore antidilutive under the terms of IAS 33.
The losses/earnings and number of weighted average number of
shares used in the calculations are as follows:
2018 2017
Losses Shares LPS Earnings Shares EPS
GBP000 000 pence GBP000 000 pence
Basic (loss)/earnings
per share (3,301) 95,263 (3.47) 1,761 91,363 1.93
Effect of additional
shares under option - - - - 2,873 (0.06)
-------- ------- -------- ------------- ------- --------------
Diluted (loss)/earnings
per share (3,301) 95,263 (3.47) 1,761 94,236 1.87
-------- ------- -------- ------------- ------- --------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEDFULFUSEIE
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