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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Summit Therapeutics Plc | LSE:SUMM | London | Ordinary Share | GB00BN40HZ01 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 20.50 | 18.00 | 23.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMSUMM
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 (GBP19.2 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 GBP7.5 million compared to a
loss of GBP20.2 million for the year ended 31 January 2018.
-- Cash and cash equivalents at 31 January 2019 of GBP26.9 million compared
to GBP20.1 million at 31 January 2018.
Conference Call and Webcast Information
Summit 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 Therapeutics
Summit 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
Glyn Edwards / Richard Pye (UK office) Tel: 44 (0)1235 443 951
Michelle Avery (US office) +1 617 225 4455
Cairn Financial Advisers LLP (Nominated
Adviser) Tel: +44 (0)20 7213 0880
Liam Murray / Tony Rawlinson
N+1 Singer (Joint Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / Jen Boorer, Corporate Finance
Tom Salvesen, Corporate Broking
Bryan Garnier & Co Limited (Joint Broker) Tel: +44 (0)20 7332 2500
Phil Walker / Dominic Wilson
MSL Group (US) Tel: +1 781 684 6557
mailto:summit@mslgroup.com
Jon Siegal summit@mslgroup.com
------------------------------
Consilium Strategic Communications (UK) Tel: +44 (0)20 3709 5700
Mary-Jane Elliott / Sue Stuart / Jessica Hodgson / mailto:summit@consilium-comms.
com
summit@consilium-comms.com
------------------------------
Lindsey Neville
Forward Looking Statements
Any 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, FFPM
Non-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.
Discovery
Summit'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.
Development
Improving 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.
Commercialisation
While 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 Programme
In 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 Target
In 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 Collaboration
Prior 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 GBP43.0 million for the year ended 31 January 2019 compared
to GBP12.4 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 GBP42.3 million. This
included GBP6.3 million of cost-share income which the Group continues
to receive.
The Group also recognised GBP0.5 million of revenue during the year
ended 31 January 2019 relating to the receipt of a $2.5 million (GBP1.9
million) upfront payment in respect of the licence and commercialisation
agreement signed with Eurofarma in December 2017 and GBP0.2 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 GBP12.5 million to GBP15.2 million
for the year ended 31 January 2019 from GBP2.7 million for the year
ended 31 January 2018. This increase resulted primarily from the
recognition of GBP13.1 million during the year ended 31 January 2019, as
compared to GBP1.8 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 GBP1.2 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, GBP0.3 million was recognised in
respect of UK Research and Development Expenditure Credits.
During the year ended 31 January 2019, the Group also recognised GBP0.5
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 Expenses
Research and development expenses increased by GBP10.2 million to
GBP39.2 million for the year ended 31 January 2019 from GBP29.0 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 GBP12.3
million to GBP17.9 million for the year ended 31 January 2019 from
GBP5.6 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 GBP1.9 million for the year ended 31
January 2019 compared to GBP0.1 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 GBP6.5 million to
GBP9.5 million for the year ended 31 January 2019 from GBP16.0 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 GBP2.5 million to
GBP9.8 million during the year ended 31 January 2019 as compared to
GBP7.3 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 Expenses
General and administration expenses increased by GBP0.3 million to
GBP12.3 million for the year ended 31 January 2019 from GBP12.0 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 Assets
As a result of discontinuing the development of ezutromid, the Group
recognised an impairment charge during the year ended 31 January 2019 of
GBP4.0 million relating to the utrophin programme intangible asset and
goodwill associated with the acquisition of MuOx Limited.
Finance Income
Finance income was GBP2.8 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 GBP3.1 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 GBP0.4 million
for the year ended 31 January 2019 compared to GBP1.2 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 GBPnil 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 GBP2.5
million as compared to GBP3.8 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 GBP5.0 million for the year ended 31
January 2019 compared to a loss before income tax of GBP24.0 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 GBP7.5 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
GBP20.2 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 GBP6.3 million for the year ended 31
January 2019 compared to a net cash outflow of GBP6.0 million for the
year ended 31 January 2018.
Operating Activities
Net cash used in operating activities for the year ended 31 January 2019
was GBP26.8 million compared to GBP14.7 million for the year ended 31
January 2018. This increase of GBP12.1 million was primarily driven by
an increase in operating costs of GBP6.4 million, a net reduction in
cash received from licensing agreements and funding arrangements of
GBP2.5 million and a negative movement in taxation cash flows of GBP3.2
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 Activities
Net cash used in investing activities for the year ended 31 January 2019
was GBP0.3 million compared to GBP5.2 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
GBP4.8 million used in the acquisition of Discuva Limited in December
2017, net of cash acquired as part of the transaction, and a further
GBP0.5 million used to acquire property, plant and equipment and
intangible assets mainly in relation to the relocation of our UK office
in Oxford.
Financing Activities
Net cash generated from financing activities for the year ended 31
January 2019 was GBP33.4 million. This includes GBP14.1 million of net
proceeds received following the Group's equity placing on the AIM market
of the London Stock Exchange in March 2018, GBP19.2 million of net
proceeds received following the Group's private placement of ADSs in the
United States in January 2019, and GBP0.1 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 GBP13.9
million included GBP13.5 million of net proceeds received following the
Group's underwritten public equity offering in September 2017, and
GBP0.4 million received following the exercise of warrants and share
options.
Financial Position
As at 31 January 2019, total cash and cash equivalents held were GBP26.9
million (31 January 2018: GBP20.1 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
GBP15.0 million were raised and directly attributable transaction costs
of GBP0.9 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 (GBP19.6
million) were raised and directly attributable transaction costs of
GBP0.4 million were incurred.
During the year 367,924 Restricted Stock Units and share options were
exercised raising net proceeds of GBP0.1 million.
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income (audited)
For the year ended 31 January 2019
Year ended Year ended Year ended
31 January 2019 31 January 2019 31 January 2018
(Adjusted*)
Note $000s GBP000s GBP000s
------------------------------------------------------- ----- ------------------ ------------------ ------------------
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 2 12 cents 9 pence (31) pence
from operations
------------------------------------------------------- ------ ------------------ ------------------ ------------------
* 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 Three months ended Three months ended
31 January 2019 31 January 2019 31 January 2018
(Adjusted*)
Note $000s GBP000s GBP000s
------------------------------------------------------ ----- -------------------- -------------------- --------------------
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 2 (7) cents (5) pence (16) pence
operations
------------------------------------------------------ ------ -------------------- -------------------- --------------------
* 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 31 January
2019 2019 31 January 2018
(Adjusted*)
Note $000s GBP000s GBP000s
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 Year ended Year ended
31 January 2019 31 January 2019 31 January 2018
(Adjusted*)
$000s GBP000s GBP000s
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
Currency
translation
Share capital Share premium account Share-based payment reserve Merger reserve Special reserve reserve Accumulated losses reserve Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------------------------------------ ------------- ----------------------- ----------------------------- -------------- --------------- ------------ ---------------------------- ----------
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
Currency
translation
Share capital Share premium account Share-based payment reserve Merger reserve Special reserve reserve Accumulated losses reserve Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------------------------------------- ------------- ----------------------- --------------------------- ---------------- --------------- -------------- ---------------------------- ----------
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 Accounting
This 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 GBP1.00. 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 (GBP17.2 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, GBP13.1 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) GBP12.4 million related to the development milestone
payment; and (ii) GBP0.7 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 Original Adjusted
Consolidated Year ended 31 January 2018 Year ended 31 January 2018 Impact
Statement of
Financial
Position GBP000s GBP000s GBP000s
---------------- ----------------------------- ----------------------------- ----------
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)
---------------- -------------------- ------ -------------------- ------ -------
Original Adjusted
Impact on Year ended Year ended
Consolidated 31 January 2018 31 January 2018 Impact
Statement of
Comprehensive
Income GBP000s GBP000s GBP000s
-------------------- ------------------ ------------------ ----------
Revenue 25,419 12,360 (13,059)
Loss for the year (7,131) (20,190) (13,059)
-------------------- -------------- -------------- -------
Original Adjusted
Impact on Year ended Year ended
Consolidated 31 January 2018 31 January 2018 Impact
Statement of Cash
Flows GBP000s GBP000s GBP000s
-------------------- ------------------ ------------------ ----------
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:
Year
Three months ended Three months ended ended Year ended
31 January 2019 31 January 2018 31 January 2019 31 January 2018
(Adjusted*) (Adjusted*)
000s 000s 000s 000s
----------------------------------------------------------- ---- -------------------- --- -------------------- --- ---------------- --- ------------------
(Loss) / profit for the period / year GBP (5,159) GBP (11,283) GBP 7,527 GBP (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
GBP (0.05) (0.16) 0.09 (0.31)
----------------------------------------------------------------- ----------- ------ --- ----------- ------ --- ---------------- --- ---------- -----
Diluted (loss) / earnings per ordinary share from
operations GBP (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
GBP15.0 million were raised and directly attributable transaction costs
of GBP0.9 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 (GBP19.6
million) were raised and directly attributable transaction costs of
GBP0.4 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 GBP0.1 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-
(END) Dow Jones Newswires
March 27, 2019 07:00 ET (11:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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