Final Results

 
TIDMSUMM 
 
Summit Corporation plc 
("Summit" or "the Company") 
 
 
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2010 
 
Oxford, UK, 6 May 2010, Summit (AIM: SUMM), a UK drug discovery Company with 
partner funded programmes and an innovative SeglinTM (Second Generation Lead 
Iminosugar) technology platform for the discovery of new medicines, today 
reports its preliminary results for the year ended 31 January 2010. 
 
Highlights 
 
Partner Funded Portfolio: Good progress made in key programmes 
  * BMN-195 for Duchenne Muscular Dystrophy entered into Phase I clinical trials 
    by partner BioMarin Pharmaceuticals Inc; top-line results now expected in Q2 
    2010. 
  * SMT 19969 selected as lead compound against C. difficile pathogen in 
    Wellcome Trust grant funded programme. 
 
 
SeglinTM Technology: Identifying medicines from new chemistry space 
  * Advances in development of technology platform with active Seglins 
    identified against a range of major disease areas. 
  * Progress in diabetes programme following identification of SMT 14224 as lead 
    candidate with potential new mechanism of action. 
  * Breakthrough in hepatitis C programme following identification of hits 
    against previously intractable NS3 helicase protein target. 
 
 
Operational and Financial: A refocused, restructured and well-funded business 
  * Successful  GBP5.4m Placing and Open Offer funds business until at least 
    December 2011, which is beyond projected receipt of milestones from deals. 
  * Completion of extensive restructuring programme to reduce net cash used in 
    operating activities by approximately 70%. 
  * Loss for period reduced by 75% to  GBP5.4m (2008/09:  GBP22.4m). 
  * Cash position of  GBP6.1 million on 31 January 2010 (31 January 2009:  GBP2.7m). 
 
 
Steven Lee, PhD, Chief Executive Officer commented, "Summit has emerged from a 
challenging year as a focused business with a financial base from which to 
deliver significant value growth for our shareholders. 
 
"Over the coming year, I look forward to key developments from within our 
partner funded programmes, including the Phase I clinical trial results for 
BMN-195 targeting Duchenne Muscular Dystrophy.  In addition, we are building on 
the exciting scientific results generated from our SeglinTM technology which 
will further exemplify the potential of this innovative platform as a source of 
new medicines." 
 
                                    - END - 
 
For more information, please contact: 
 
 Summit 
 
 Steven Lee, PhD 
 
 Richard Pye, PhD                             Tel: [phone] 
 
 
 
 Singer Capital Markets (Nominated Adviser) 
 
 Shaun Dobson / Claes Spång                   Tel: [phone] 
 
 
 
 Peckwater PR 
 
 Tarquin  Edwards                             Tel: [phone] 
                                              [e-mail] 
 
 
About Summit 
 
Summit is an Oxford, UK based drug discovery company with a portfolio of partner 
funded drug programmes and an innovative technology platform called SeglinsTM 
for the discovery of new medicines. 
 
Summit's partnered drug programmes require no further investment from the 
Company but have contractual, success-based milestones potentially worth in 
excess of $160 million and sales royalties rising to a low teen percentage. 
 Partners include leading orphan drug specialist BioMarin Pharmaceuticals 
(Duchenne Muscular Dystrophy programme) and the Wellcome Trust (C. difficile 
programme). 
 
SeglinTM technology 
SeglinTM technology is using new chemistry to access biological drug targets 
that cannot be exploited by conventional drug discovery approaches.  Summit's 
internal research is currently focussed in the high value therapy areas of type 
II diabetes and infectious diseases and the Company will further exploit the 
technology's wider potential through strategic alliances. 
 
Summit is listed on the AIM market of the London Stock Exchange and trades under 
the ticker symbol SUMM.  Further information is available at www.summitplc.com 
<http://www.summitplc.com/>. 
 
 
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT 
 
INTRODUCTION 
 
We are pleased to report that your Company ended the Financial Year in much 
better health than it started, in spite of the difficult prevailing economic 
conditions. 
 
The improvement stems from a refocusing and restructuring of the Company's 
operations, alongside an aggressive cost reduction programme, a successful 
Placing and Open Offer that raised  GBP5.4 million, before costs, the award of a 
grant from the Wellcome Trust of up to  GBP2.2 million and also advances in a 
number of drug discovery programmes. Summit now has cash resources that are 
anticipated to last until at least the end of December 2011. 
 
We believe that the Company is now well placed to generate value from its 
portfolio of partner funded drug programmes and from its innovative SeglinTM 
technology platform for the discovery of new medicines. 
 
 
STRATEGY 
 
Summit's strategy remains focused on creating value through the selection and 
early-stage development of novel product candidates from its SeglinTM technology 
platform in areas of high unmet medical need.  At the appropriate stage of 
development, Summit will seek to out-license these product candidates with 
partners who will be responsible for the expensive registration studies and 
product commercialisation.  We currently have a number of partnered programmes 
that are funded by third parties and these have yielded over $7 million in 
upfront payments in the last two years.  In addition, Summit is eligible to 
receive contractual, success based milestone payments potentially worth in 
excess of $160 million and sales royalties rising to a low teen percentage. 
 
Our focus for entering into new commercial agreements is our SeglinTM (Second 
Generation Lead Iminosugar) technology platform.  This innovative technology, 
which has the potential to identify medicines in a range of major therapy areas, 
was the primary focus of our internally funded research and development 
activities during the period.  As discussed later, Summit is developing this 
technology in the areas of type II diabetes and infectious diseases and also 
aims to exploit the wider potential of this technology in other major therapy 
areas through strategic alliances. 
 
 
REFOCUSED, RESTRUCTURED AND REFINANCED 
 
Summit completed its restructuring programme during the period under review. 
 The programme was started in mid-2008 as part of the Company's strategy to 
refocus operations on drug discovery activities and on developing our SeglinTM 
technology, which we believe represents an excellent opportunity for the 
business to create significant value growth. 
 
In December 2009, we were pleased to announce the successful Placing and Open 
Offer raising  GBP5.4 million, before expenses, and this has provided the business 
with cash resources until at least December 2011, excluding the receipt of any 
milestones from existing or new deals. 
 
The restructuring programme included the divestment of Summit's non-core 
Zebrafish and Dextra service divisions in May 2009 and September 2009 
respectively, a reduction in the number of sites in operation from five to one 
with more favourable terms of rent being renegotiated for the remaining site, 
and the renegotiating of certain existing licensing agreements.  This is 
discussed in more detail in the Financial Review.  These activities reduced the 
Company's operational cash burn by approximately 70%. 
 
In addition, headcount was reduced by 75% while the Board and Executive 
management reduced their fees or took pay-cuts of between 20 and 55%.  These 
were necessary actions to secure the future of the business.  On behalf of the 
Board, we again thank the staff who were made redundant for their commitment 
during their time with the business and wish them well in their future careers. 
 
 
PORTFOLIO OF PARTNER FUNDED PROGRAMMES 
 
During the period, Summit's portfolio of partnered drug programmes, which 
requires no further investment from the Company, has made good progress. 
 
DMD Programme advances into clinical trials 
Summit's programme targeting the fatal genetic disorder Duchenne Muscular 
Dystrophy ('DMD') could provide a major benefit to patients and represents a 
significant value creation opportunity for Summit in the near and medium term. 
 
In January 2010, Summit received a major boost when BioMarin Pharmaceuticals 
Inc. announced that it had initiated a Phase I clinical study of BMN-195 
(formerly SMT C1100) for the treatment of DMD.  BMN-195 was discovered by our 
scientists and its progression into clinical trials represents a major 
achievement for the Company and is testament to the scientific expertise that 
exists within the business.  Importantly, BMN-195 has the potential to become a 
first-in-class disease modifying medicine that could treat the entire spectrum 
of patients with this deadly disease. 
 
BioMarin reported recently that they expect initial results from this Phase I 
trial in Q2 2010, and if successful, a Phase II patient trial could start in Q1 
2011. 
 
The programme was exclusively licensed to BioMarin in July 2008.  Summit is 
eligible to receive success based development and regulatory milestones of up to 
$50 million in addition to sales milestones of $85 million and tiered sales 
royalties rising to a low-teen percentage. 
 
 
 GBP2.2m Wellcome Trust Grant to Fund C. difficile Programme 
In December 2009, Summit was awarded a grant worth up to  GBP2.2 million from the 
Wellcome Trust to fund the development of the Company's C. difficile infectious 
disease programme.   The grant was awarded following a highly competitive and 
rigorous application process and it provides a major endorsement of the 
scientific innovation and expertise that exists within Summit. 
 
C. difficile is a life threatening pathogen for which current therapy options 
are limited.  In 2008 in the UK, C. difficile was responsible for over three 
times more deaths than the MRSA superbug while cost of care in the US is 
estimated at $1.1 billion and rising.  From initial studies, Summit has 
indentified a novel class of small molecules, including the leading compound SMT 
19969, which have an attractive activity profile.  SMT 19969 is highly but 
selectively active only against all clinically relevant C. difficile strains 
including the endemic, hyper-virulent 027 strain that is associated with higher 
mortality rates.  This selectivity is a key property for any new antibiotic 
treatment against this pathogen as it means the other bacterium that naturally 
exists in a healthy human gut would be unharmed. 
 
The award of the grant by Wellcome has allowed Summit to advance SMT 19969 into 
proof of concept studies in the gold standard in vivo model.  In addition, a 
range of in depth bacterial resistance and mechanism of action studies have 
commenced.  The results from all these studies are expected in the second half 
of this year, and if successful, we would anticipate having a package of data 
that could be attractive to potential commercial partners.  We look forward to 
reporting on the progress of this exciting programme over the coming months. 
 
 
Signing of New Co-development Agreements 
In May 2009, Summit signed three new co-development agreements with the 
Taiwan-based company, Orient Pharma for the reprofiled drug programmes in acne 
(SMT D002), glaucoma (SMT D003) and wet age-related macular degeneration (AMD, 
SMT D004).  The agreements provide Orient with exclusive development and 
commercialisation rights in Asia-Pacific and Australasia and they will be 
responsible for all development, manufacturing and distribution costs within 
those territories. 
 
In addition, and as part of the restructuring programme, Summit signed a new 
agreement for the sialorrhoea programme (SMT D001) that entailed Orient taking 
full ownership of the programme.  The terms of the deal involved Orient making 
an equity investment in Summit of $500,000 at a price of 13.5 pence per share, 
which was approximately 2.5 times the Company's share price at that time. 
 
Although Summit's future research and development activities are now primarily 
focused on the SeglinTM technology, these programmes remain a potential source 
of future value upside that requires no investment from the Company. 
 
 
SEGLINTM TECHNOLOGY: Identifying medicines from new chemistry space 
 
Our SeglinTM technology represents the major area of research and development 
investment for the business.  This innovative technology uses new chemistry to 
access biological targets that cannot be exploited by conventional drug 
discovery approaches. 
 
It is our belief that SeglinTM technology provides a major opportunity for the 
discovery of new medicines in a number of therapeutic areas and has the 
potential to deliver significant value growth.  This belief was supported by new 
and existing shareholders, who invested during the recent fundraising.  These 
new funds help ensure that the business has the resources to develop the Seglin 
platform to the point where we believe it will deliver new licensing and 
collaboration deals. 
 
Summit has validated the platform through the identification of a number of 
advanced Seglin compounds in a range of therapy areas.  This includes our Seglin 
compound targeting malignant melanoma cancer, which has been given the 
preclinical development candidate identity SMT C2100, SMT 14224 for type II 
diabetes and SMT 15000 as a biodefence countermeasure.  In addition, SeglinTM 
technology has generated hits in a wide range of other disease areas. 
 Collectively, these data exemplify the potential power of the platform. 
 
Summit's main therapeutic areas of focus are in metabolic diseases and 
infectious diseases and good progress was made in both of these areas during the 
period.  In addition, we aim to exploit the wider potential of this innovative 
technology beyond our focus areas by collaborating with other parties through 
strategic alliances.  It is pleasing to report that we are receiving increasing 
levels of interest from major pharmaceutical and biotechnology companies about 
the technology and are currently exploring potential collaborations with 
interested parties. 
 
The coming year represents an important period in the development of the 
technology and we look forward to reporting on its progress in due course. 
 
 
Seglin Focus Areas: Metabolic diseases 
Our focus in metabolic diseases is on the development of potential treatments 
for type II diabetes, which affects over 18 million patients in the US alone and 
has a global market worth in excess of $25 billion. 
 
During the period under review, this programme has made good progress and a 
package of data has been generated that has already garnered interest from 
potential commercial partners.  Our lead Seglin compound, SMT 14224, has 
demonstrated in vivo proof of concept in chronic and acute efficacy models and 
significantly, the results generated to date indicate it may operate via a new 
mechanism of action.  Furthermore, a set of additional compounds have been 
identified from in vitro screening and these are now undergoing optimisation 
work. 
 
It is the belief of the Board that further value can be added to the programme, 
and having received the financial support from our investors, additional studies 
are underway to reinforce data already generated to confirm the potential unique 
position of SMT 14224 and additional compounds.  We expect to report results 
from these studies in the second half of 2010. 
 
Seglin Focus Areas: Infectious diseases 
Our second focus area targets infectious diseases and specifically viral 
diseases.  Multiple hit compounds against a range of viral diseases have been 
identified using the SeglinTM technology and the most advanced of these 
programmes targets the life threatening disease hepatitis C ('HCV'), which the 
World Health Organisation estimates affects 170 million people worldwide. 
 
Summit is using the SeglinTM technology against a set of hepatitis C targets 
including the NS3 helicase protein, an enzyme that unwinds the double-stranded 
RNA complex allowing the virus to replicate.  HCV helicase is a well validated 
target that has proved to be intractable despite major efforts being made over 
the last decade by the pharmaceutical industry.  Summit has identified a number 
of active Seglins against this enzyme.  This represents a breakthrough towards 
finding new drugs to treat hepatitis C, and importantly, exemplifies the wider 
potential of Seglins to access intractable targets.  Results from this, and 
other on-going studies, are expected in the second half of 2010. 
 
 
BOARD AND MANAGEMENT CHANGES 
 
Mr Raymond Spencer ACA joined Summit in March 2009 as interim Chief Financial 
Officer.  Raymond has provided valuable strategic support and input to the Board 
during the year.  In addition, his financial expertise in operational management 
and corporate transactions has helped ensure that the business has emerged from 
the challenges of the year in a stronger position.  The Board is pleased that 
Raymond has agreed to continue in this role on a permanent, part-time basis.  In 
March 2009, Mr Anthony Weir left the Company by mutual consent. 
 
 
SUMMARY 
 
It is the belief of the Board that the Company has emerged from this challenging 
period with a solid foundation from which to deliver value growth for our 
investors. 
 
The restructuring and refocusing of the business ensures the Company has the 
necessary resources in place so as to benefit from the receipt of milestone 
payments from existing deals and is also in a position to exploit the exciting 
potential offered by our innovative SeglinTM technology. 
 
On behalf of the Board, we wish to thank our loyal and dedicated staff who 
worked hard to ensure the business came through a difficult year.  Finally, we 
thank all our shareholders for their continuing support and we look forward to 
reporting on future progress of Summit during what we anticipate will be an 
exciting period for your Company. 
 
 
Barry Price, PhDSteven Lee, PhD 
ChairmanChief Executive Officer 
 
5 May 2010 
 
 
FINANCIAL REVIEW 
 
During the period under review, Summit has made good progress in strengthening 
the financial position of the Group in spite of the challenging economic 
conditions. 
 
The Group has ended the year with  GBP6.1 million in cash following completion of 
the Placing and Open Offer in December 2009 and, together with the radical 
action taken by your Board to reduce costs, the Group now has sufficient cash to 
last until at least December 2011. 
 
The cost savings have been achieved through a combination of a reduction in head 
count (and associated salaries), Directors' remuneration, lease of premises, 
general overheads and a more focused approach in research and development 
investment. Total operating costs on continuing operations have fallen by  GBP7.5 
million to  GBP5.8 million (2008/09:  GBP13.3 million).  Consequently, the loss 
attributable to continuing operations fell by over 50% to  GBP5.5 million (2008/09: 
 GBP11.3 million), with the total loss for the period falling by approximately 75% 
to  GBP5.4 million (2008/09:  GBP22.4 million).  It is expected that the full benefit 
of the restructuring programme will be reflected in the coming financial year. 
 
As noted in the Chairman and Chief Executive's Statement, your Board is pleased 
to report the progress made by BioMarin Pharmaceuticals Inc. in progressing the 
DMD product BMN-195 into Phase I human clinical studies. BioMarin expect a 
readout from this trial in the second quarter of 2010. The subsequent entry into 
a Phase II study will trigger a $3 million milestone due to Summit and, if this 
is successful, a pivotal study will generate an additional $10 million milestone 
payment to Summit. 
 
We were pleased with the support of shareholders in the  GBP5.4 million, before 
expenses, raised in the Placing and Open Offer in December 2009 and particularly 
from the Company's largest shareholder, Lansdowne, who provided a cornerstone 
investment and increased their ownership in the Company to 29.9%. In December 
2009 the Group was awarded a grant from the Wellcome Trust for its C. difficile 
programme of up to  GBP2.2 million.  GBP558,000 of this grant was received in January 
2010. 
 
In addition the Company raised  GBP315,000 from an issue of shares to Orient Pharma 
as part of a renegotiation of the commercial arrangements with them. In May 
2009, the Zebrafish business was sold for  GBP500,000 and in September 2009 the 
Dextra business was sold for  GBP950,000. In each case the proceeds were in cash 
and subject to either a working capital adjustment or net asset adjustment. The 
Group also received  GBP815,000 (2008/09:  GBP898,000) in R&D tax credits during the 
year. 
 
Your Board believes that the Group now has sufficient resources to develop its 
core programmes over the next two years and establish whether they have 
potential medical utility and also to chart the progress of the DMD programme 
with BioMarin. 
 
For continuing operations during the period under review, research and 
development costs fell by 55% to  GBP2.3 million (2008/09:  GBP5.1 million) while 
combined general and administrative and sales and marketing expenses fell by 
33% to  GBP2.9 million (2008/09:  GBP4.3 million). Headcount has fallen from an 
average of 142 in the year ended 31 January 2009 to 31 employees as at 31 
January 2010. The Chief Executive Officer and Chief Scientific Officer also 
agreed to cuts in their basic salaries of 25% and 20% respectively; the members 
of the Board also reduced their fees by between 27% and 55%. The cost of leasing 
premises has fallen from over  GBP1.0 million per annum to approximately  GBP200,000 
per annum from January 2010. In total, the cash burn from operating activities 
has fallen from  GBP10.1 million to  GBP3.1 million. 
 
 
Working Capital 
 
Following the fundraise, grant receipts, sales of Dextra and Zebrafish, R&D tax 
credit and the significant cost reductions during the year, the Group had  GBP6.1 
million in cash at 31 January 2010 (31 January 2009:  GBP2.7 million) which is 
sufficient on current projections until at least December 2011 excluding any 
revenues other than the Wellcome Trust grant. These financial statements have, 
therefore, been prepared on a Going Concern basis. 
 
 
Summary 
 
The Group has emerged from the year as a streamlined and refocused drug 
discovery business that is funded beyond the point where it anticipates 
receiving additional revenues from existing or new deals. 
 
It is the belief of the Board that a solid foundation has been laid from which 
the Group will be able to provide value growth for our investors through the 
progression of the partner funded programmes and development of our innovative 
SeglinTM technology platform. 
 
 
Raymond Spencer, ACA 
Chief Financial Officer 
 
5 May 2010 
 
 
 
FINANCIAL STATEMENTS 
 
Consolidated Statement of Comprehensive income 
For the year ended 31 January 2010 
 
                                                                 Year       Year 
                                                                ended      ended 
                                                           31 January 31 January 
                                                                 2010       2009 
                                                                      (Restated) 
 
                                                                 GBP000s       GBP000s 
=------------------------------------------------------------------------------- 
Revenue                                                           189        185 
 
 
 
Cost of sales                                                       -        (4) 
 
 
=------------------------------------------------------------------------------- 
Gross profit                                                      189        181 
 
 
 
Other operating income                                            196        195 
 
 
 
Administrative expenses 
 
  Research and development                                    (2,302)    (5,119) 
 
  General and administration                                  (2,630)    (3,490) 
 
  Sales and marketing                                           (233)      (779) 
 
  Depreciation and amortisation                                 (826)    (1,555) 
 
  Accelerated depreciation of leasehold improvements          (1,361)          - 
 
  Impairment                                                        -    (2,597) 
 
  Release of loan                                               1,211          - 
 
  Share-based payment                                             (4)      (154) 
=------------------------------------------------------------------------------- 
Total administrative expenses                                 (6,145)   (13,694) 
 
 
 
Operating loss                                                (5,760)   (13,318) 
 
 
 
Finance income                                                      8        299 
 
Finance cost                                                     (67)       (81) 
 
 
=------------------------------------------------------------------------------- 
Loss before taxation                                          (5,819)   (13,100) 
 
 
 
Taxation                                                          372      1,747 
=------------------------------------------------------------------------------- 
Loss for the year from continuing operations                  (5,447)   (11,353) 
 
Profit/(loss) for the year from discontinued operations            28   (11,050) 
=------------------------------------------------------------------------------- 
Loss and total comprehensive expense for the year             (5,419)   (22,403) 
attributable to owners of the parent 
=------------------------------------------------------------------------------- 
 
 
Basic and diluted loss per ordinary share for continuing 
operations                                                    (8.13)p   (21.26)p 
 
Basic and diluted profit / (loss) per ordinary share for 
discontinued operations                                         0.04p   (20.70)p 
 
 
The comparatives have been restated as a result of the discontinued operations 
(Note 2). 
 
 
Consolidated Statement of Financial Position 
As at 31 January 2010 
 
                                                      31 January 2010 31 January 
                                                                            2009 
 
                                                                 GBP000s       GBP000s 
=------------------------------------------------------------------------------- 
ASSETS 
 
Non-current assets 
 
Intangible assets                                               4,535      4,820 
 
Property, plant and equipment                                     335      3,714 
=------------------------------------------------------------------------------- 
                                                                4,870      8,534 
 
Current assets 
 
Inventories                                                         -        391 
 
Trade and other receivables                                       246      1,495 
 
Current tax                                                       306        805 
 
Cash and cash equivalents                                       6,082      2,717 
=------------------------------------------------------------------------------- 
                                                                6,634      5,408 
 
 
=------------------------------------------------------------------------------- 
Total assets                                                   11,504     13,942 
=------------------------------------------------------------------------------- 
 
 
LIABILITIES 
 
Current liabilities 
 
Trade and other payables                                      (1,104)    (1,732) 
 
Borrowings                                                          -      (135) 
=------------------------------------------------------------------------------- 
Total current liabilities                                     (1,104)    (1,867) 
 
 
 
Non-current liabilities 
 
Deferred income                                                     -      (141) 
 
Provisions                                                    (1,180)    (1,180) 
 
Borrowings                                                          -    (1,181) 
 
Deferred tax                                                    (942)    (1,020) 
=------------------------------------------------------------------------------- 
Total non-current liabilities                                 (2,122)    (3,522) 
 
 
=------------------------------------------------------------------------------- 
Total liabilities                                             (3,226)    (5,389) 
=------------------------------------------------------------------------------- 
 
=------------------------------------------------------------------------------- 
Net assets                                                      8,278      8,553 
=------------------------------------------------------------------------------- 
 
 
EQUITY 
 
Share capital                                                   6,910      5,597 
 
Share premium account                                          29,633     25,785 
 
Share-based payment reserve                                     1,159      1,176 
 
Merger reserve                                                (1,943)     12,654 
 
Retained earnings                                            (27,481)   (36,659) 
=------------------------------------------------------------------------------- 
Total equity attributable to the equity shareholders 
of the Parent                                                   8,278      8,553 
=------------------------------------------------------------------------------- 
 
 
Consolidated Statement of Cash Flows 
For the year ended 31 January 2010 
 
                                                           Year ended Year ended 
                                                           31 January 31 January 
                                                                 2010       2009 
 
                                                                 GBP000s       GBP000s 
=------------------------------------------------------------------------------- 
 
 
Cash flows from operating activities 
 
Loss before tax from continuing activities                    (5,819)   (13,100) 
 
Profit before tax from discontinued activities                     28   (11,027) 
=------------------------------------------------------------------------------- 
                                                              (5,791)   (24,127) 
 
 
 
Adjusted for: 
 
Finance income                                                    (8)      (304) 
 
Finance cost                                                       69         85 
 
Foreign exchange loss                                              22          2 
 
Depreciation                                                    2,045      1,182 
 
Amortisation of intangible fixed assets                           323        718 
 
Loss on disposal                                                    7        198 
 
Impairment loss                                                     -     12,464 
 
Cancellation of loan                                          (1,211)          - 
 
Share-based payment                                              (18)        212 
=------------------------------------------------------------------------------- 
Adjusted loss from operations before changes in working       (4,562)    (9,570) 
capital and provisions 
 
 
 
Decrease in trade and other receivables                           923         86 
 
Decrease/(Increase) in inventories                                181       (54) 
 
(Decrease) in trade and other payables                          (451)    (1,489) 
=------------------------------------------------------------------------------- 
Cash used by operations                                       (3,909)   (11,027) 
 
 
 
Taxation Received                                                 815        898 
=------------------------------------------------------------------------------- 
Net cash used in operating activities                         (3,094)   (10,129) 
=------------------------------------------------------------------------------- 
 
 
 
 
Investing activities 
 
Proceeds from disposal of discontinued operations               1,507          - 
 
Proceeds from disposal of property, plant and equipment             8         - 
 
Purchase of property, plant and equipment                        (48)      (997) 
 
Purchase of intangible assets                                    (40)      (150) 
 
Interest received                                                   8        304 
=------------------------------------------------------------------------------- 
Net cash used in investing activities                           1,435      (843) 
=------------------------------------------------------------------------------- 
 
 
Financing activities 
 
Proceeds from issue of share capital                            5,706      3,900 
 
Transaction costs on share capital issued                       (552)          - 
 
Repayment of debt during the period                              (53)      (204) 
 
Repayment of finance lease costs                                  (8)       (10) 
 
Interest paid                                                    (69)       (85) 
=------------------------------------------------------------------------------- 
Net cash generated from financing activities                    5,024      3,601 
=------------------------------------------------------------------------------- 
 
 
Net increase/(decrease) in cash and cash equivalents            3,365    (7,371) 
 
 
 
Cash and cash equivalents at beginning of period                2,717     10,088 
 
 
=------------------------------------------------------------------------------- 
Cash and cash equivalents at end of year                        6,082      2,717 
=------------------------------------------------------------------------------- 
 
 
Consolidated Statement of Changes in Equity 
 
For the year ended 31 January 2010 
                               Share   Share-based 
                     Share   premium       payment     Merger   Retained 
                   capital   account       reserve    reserve   earnings   Total 
Group                 GBP000s      GBP000s          GBP000s       GBP000s       GBP000s    GBP000s 
 
At 1 February 
2009                 5,597    25,785         1,176     12,654   (36,659)   8,553 
 
Loss for the 
year from 
continuing 
operations               -         -             -          -    (5,447) (5,447) 
 
Profit for the 
year from 
discontinued 
operations               -         -             -          -         28      28 
=------------------------------------------------------------------------------- 
Total 
comprehensive 
expense for the 
year                     -         -             -          -    (5,419) (5,419) 
 
New share 
capital issued       1,313     4,400             -          -          -   5,713 
 
Transaction 
costs on share 
capital issued                 (552)                                       (552) 
 
Transfer 
following 
realisation on 
disposal of 
discontinued 
operations                                           (14,597)     14,597       - 
 
Share-based 
payment                  -         -          (17)          -          -    (17) 
=------------------------------------------------------------------------------- 
At 31 January 
2010                 6,910    29,633         1,159    (1,943)   (27,481)   8,278 
 
 
For the year ended 31 January 2009 
                           Share   Shares  Share-based 
                  Share  premium    to be      payment  Merger Retained 
                capital  account   issued      reserve reserve earnings    Total 
Group              GBP000s     GBP000s     GBP000s         GBP000s    GBP000s     GBP000s     GBP000s 
 
At 1 February 
2008              4,967   22,750    1,443          964  11,328 (14,256)   27,196 
 
Loss for the 
year                  -        -        -            -       - (22,403) (22,403) 
=------------------------------------------------------------------------------- 
Total 
comprehensive 
expense for 
the year                                                       (22,403) (22,403) 
 
New share 
capital issued      630    3,035    (117)            -       -        -    3,548 
 
Share-based 
payment               -        -        -          212       -        -      212 
 
Share issue 
eligible for 
merger relief                     (1,326)                1,326                 - 
=------------------------------------------------------------------------------- 
At 31 January 
2009              5,597   25,785        -        1,176  12,654 (36,659)    8,553 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 
For the year ended 31 January 2010 
 
 
1. Basis of accounting 
 
The  financial information set out above  does not constitute the Company's full 
statutory  accounts for the year ended  31 January 2010 or 2009 for the purposes 
of  section 435 of the Companies Act 2006, but it is derived from those accounts 
that  have been audited. Statutory accounts  for 2009 have been delivered to the 
Registrar   of  Companies  and  those  for  2010 will  be  delivered  after  the 
forthcoming  AGM. The auditors have reported on those accounts; their report was 
unqualified,  did not draw attention  to any matters by  way of emphasis without 
qualifying  their report  and did  not contain  statements under  s498(2) or (3) 
Companies Act 2006 in 2010 or under s237 (2) or (3) Companies Act 1985 in 2009. 
 
While  the financial information for the  year ended 31 January 2010 is prepared 
in accordance with the recognition and measurement requirements of International 
Financial  Reporting Standards  (IFRSs) as  endorsed by  the European  Union and 
implemented  in the  UK, this  announcement does  not itself  contain sufficient 
information  to comply with IFRSs. The Company expects to publish full financial 
statements  that comply with IFRSs later in May 2010. These financial statements 
have  also been prepared in  accordance with the accounting  policies set out in 
the 2010 Annual Report and Financial Statements, as amended by the following new 
accounting standards: 
 
 International Accounting Standards (IAS/IFRS) 
=-------------------------------------------------------- 
 IAS 1    Presentation of Financial Statements (Revised) 
 
 IFRS 8   Operating segments 
 
 
IAS 1(Revised) has led to changes in the format of the primary statements. 
Primarily, the reconciliation of the movement in equity is now a primary 
statement and not a note to the accounts and the Consolidated Statement of 
Income is now shown as Consolidated Statement of Comprehensive Income. The Group 
has adopted a '1' statement approach. 
 
The  Group  early  adopted  IFRS  8 'Operating  Segments' for the year ended 31 
January  2008 on its transition to IFRS. Further details about how the Group has 
identified  its segments and chief operating  decision maker are detailed in the 
full financial statements. 
 
The  financial information in these financial  statements has been prepared on a 
going  concern basis which  assumes that the  Group will continue in operational 
existence for the foreseeable future. Management are confident about the Group's 
ability  to continue as a going concern as  a result of the cost reductions made 
over  the last year, the  successful fund raise in  December 2009 and the future 
opportunities  for  the  business  that  are  outlined in the Chairman and Chief 
Executive's Statement and Financial Review. 
 
 
2. Discontinued operations 
 
On  7 May 2009, the  Zebrafish business,  which was  held within  part of Summit 
(Oxford)  Limited and the whole  of the subsidiary Summit  Asia Pte Limited, was 
sold  to Evotec  AG.  The  proceeds for  the sale  were  GBP500,000, plus a working 
capital adjustment of  GBP57,000, which resulted in an overall profit of  GBP275,000. 
 
On  2 September  2009 Dextra  Laboratories  Limited,  the  carbohydrate services 
business  was,  sold  to  NZP  Holding  Limited.  The proceeds for the sale were 
 GBP950,000 plus a final net asset adjustment of  GBP29,000 and resulted in an overall 
loss  of  GBP240,000. For  further details regarding  these transactions please see 
the Chairman and Chief Executive's Statement. 
 
 
The profit on the sale of the discontinued operations was calculated as follows: 
 
                                            Carbohydrates Services 
                         Zebrafish business               business         Total 
 
                                        GBP000                    GBP000           GBP000 
 
CONSIDERATION 
RECEIVED: 
 
Cash                                    557                    979         1,536 
                        -------------------------------------------------------- 
 
 
LESS ASSETS DISPOSED 
OF: 
 
                                         17                                   17 
Cash                                                           - 
 
Net assets (other than 
cash): 
 
Property, plant and                     225                  1,107         1,332 
equipment 
 
Intangibles                             -                        3             3 
 
Trade and other                          40                    286           326 
receivables 
 
Other financial assets                    -                    210           210 
 
 
Trade and other                           -                  (142)         (142) 
payables 
 
Other financial                           -                  (245)         (245) 
liabilities 
                        -------------------------------------------------------- 
                                        265                  1,219         1,484 
                        -------------------------------------------------------- 
 
 
Pre-tax gain / (loss) 
on disposal of                          275                  (240)            35 
discontinued 
operations 
 
Related tax expense                     -                      -               - 
 
                        -------------------------------------------------------- 
                                        275                  (240)            35 
                        -------------------------------------------------------- 
 
 
The  results  of  the  discontinued  operations  which have been included in the 
Consolidated Statement of Comprehensive Income were as follows: 
 
                                          Year ended                  Year ended 
                                          31 January                  31 January 
                                                2010                        2009 
 
                                                GBP000s                        GBP000s 
=------------------------------------------------------------------------------- 
Revenue                                        1,283                       1,646 
 
Expenses                                     (1,313)                    (12,673) 
=------------------------------------------------------------------------------- 
Loss before tax of discontinued 
operations                                      (30)                    (11,027) 
 
 
 
Tax                                               23                        (23) 
=------------------------------------------------------------------------------- 
Loss after tax of discontinued operations        (7)                    (11,050) 
 
 
 
Profit on sale of discontinued operations         35                           - 
 
Tax                                                -                           - 
=------------------------------------------------------------------------------- 
                                                  35                         - 
 
 
=------------------------------------------------------------------------------- 
Profit / (loss) on discontinued 
operations                                        28                    (11,050) 
=------------------------------------------------------------------------------- 
 
During  the period, the discontinued operations absorbed  GBP184,000 of the Group's 
net operating cash flows (2009:  GBP1,720,000),  GBP15,000 (2009:  GBP526,000) in respect 
of  investing  activities  and   GBP8,000  (2009:   GBP10,000) in respect of financing 
activities. 
 
 
3. Share capital 
 
On   29 May  2009 Orient  Pharma  Limited  made  a  $500,000  ( GBP314,820)  equity 
investment  via a subscription for  2,332,000 new Ordinary 10 pence  shares at a 
price  of 13.5 pence per share.  This was in  exchange for full ownership of the 
clinical  candidate SMT D001,  which is being developed  to treat sialorrhoea, a 
non-motor  symptom  of  Parkinson's  disease.  The  shares  issued to Orient are 
subject  to  a  12 month  lock-in  period  followed by a 12 month orderly market 
agreement. 
 
On  20 August  2009 the  shareholders  approved  a  reorganisation  of the share 
capital, the effect of which is that for each issued Ordinary share of 10p held, 
shareholders  were issued  with one  new Ordinary  share of 1p and nine deferred 
shares  of 1p each. The remaining authorised but unissued share capital was also 
subdivided  into 10 new Ordinary shares of  1p each. The deferred shares have no 
voting  or dividend  rights and  on a  return of  capital there  is the right to 
receive  the amount paid up  after the holders of  Ordinary shares have received 
the  amount paid  up on  those Ordinary  shares and  an additional  GBP1 million of 
return of capital per Ordinary share. 
 
On  30 December  2009 the  number  of  Ordinary  shares  in  issue  increased to 
166,249,806 following  the placing of 107,949,569 Ordinary 1p shares. The shares 
rank  pari passu  with existing  Ordinary shares.  The equity placing raised net 
proceeds of  GBP4,845,717. 
 
 
4. Annual General Meeting 
 
The Annual General Meeting is due to be held at 10:00am on Thursday, 17 June at 
the Milton Park Innovation Centre, 99 Milton Park, Abingdon, Oxfordshire, OX14 
4RY. 
 
 
Forward Looking Statements 
This document contains "forward-looking statements" within the meaning of the 
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking 
statements can be identified by words such as "anticipates", "intends", "plans", 
"seeks", "believes", "estimates", "expects" and similar references to future 
periods, or by the inclusion of forecasts or projections. 
 
Forward-looking statements are based on the Company's current expectations and 
assumptions regarding our business, the economy and other future conditions. 
Because forward-looking statements relate to the future, by their nature, they 
are subject to inherent uncertainties, risks and changes in circumstances that 
are difficult to predict. The Company's actual results may differ materially 
from those contemplated by the forward-looking statements. The Company cautions 
you therefore that you should not rely on any of these forward-looking 
statements as statements of historical fact or as guarantees or assurances of 
future performance. Important factors that could cause actual results to differ 
materially from those in the forward-looking statements and regional, national, 
global political, economic, business, competitive, market and regulatory 
conditions. 
 
 
 
[HUG#1411847]