Summit Therapeutics plc (AIM:SUMM) (NASDAQ:SMMT), the drug
discovery and development company advancing therapies for Duchenne
muscular dystrophy (‘DMD’) and C. difficile infection (‘CDI’),
today reports its financial results for the fourth quarter and
fiscal year ended 31 January 2017.
Mr Glyn Edwards, Chief Executive Officer
of Summit, commented: “We believe the progress made over
the past year in our DMD and CDI programmes, combined with our
strengthened financial position following the signing of the
Sarepta licensing agreement has placed us in a strong position to
deliver value for our patients and shareholders.
“Our Phase 2 proof of concept trial, PhaseOut
DMD, is well underway with enrolment expected to be completed in
the second quarter of 2017. We now look forward to providing the
full analysis of 24-week biopsies from the approximately 20
patients dosed with the F3 or F6 formulation of ezutromid, plus
24-week MRI and functional measures from all patients in the trial,
in the first quarter of 2018. This approach is in lieu of reporting
interim analysis from a smaller group in 2017, and it is expected
to provide a more complete picture of the potential benefits of
ezutromid at this time point on utrophin expression, muscle health
and muscle function.
“In CDI, our Phase 2 clinical data supports the
potential front-line use of ridinilazole to treat the initial
infection and provide patients with a sustained clinical response.
This sustained clinical response is the focus of our planned Phase
3 programme that is designed, with input from the FDA and EMA, to
evaluate superiority of ridinilazole over the current standard of
care antibiotic vancomycin. With the Phase 3 trials planned to
start in the first half of 2018, we look forward to an exciting and
important time ahead as we seek to bring these two potentially
important treatment options one step closer to patients.”
Utrophin Modulation Programme for
DMD
Exclusive Licence and Collaboration
Agreement
- Summit granted Sarepta Therapeutics Inc., exclusive European
rights to utrophin modulator pipeline including ezutromid
- Summit received $40 million upfront payment and is eligible to
receive up to $522 million in future ezutromid-related milestones,
plus sales royalties
- Global research and development costs related to ezutromid and
utrophin modulator pipeline to be split 55%/45% (Summit/Sarepta)
starting in 2018
Ezutromid (formerly SMT C1100) Highlights
- PhaseOut DMD Phase 2 clinical trial ongoing in UK and US, with
enrolment expected to finish in Q2 2017
- Analysis of full 24-week biopsy, MRI and functional data from
PhaseOut DMD expected to be reported Q1 2018 in lieu of an interim
24-week biopsy analysis from an initial group of patients
- Independent Data Monitoring Committee supported the extension
of PhaseOut DMD following interim review of safety and tolerability
data
- F6 formulation of ezutromid achieved six-fold increase in
maximum plasma levels in DMD patients compared to F3 formulation
and is being evaluated in PhaseOut DMD clinical trial
- Ezutromid received Fast Track designation and Rare Pediatric
Disease designation from the US Food and Drug Administration
Other activities
- Publication on the development of biomarkers to quantify
utrophin protein and muscle fibre regeneration demonstrating
continued thought leadership on utrophin modulation
CDI Programme
Ridinilazole (formerly SMT19969) Highlights
- End of Phase 2 regulatory meetings with US and European
regulators assisted design of Phase 3 development programme for
ridinilazole
- Ongoing activities to prepare ridinilazole for Phase 3 clinical
trials which are planned to start in H1 2018
- Further data from Phase 2 CoDIFy clinical trial showed
ridinilazole outperformed standard of care antibiotic vancomycin in
preserving microbiome during treatment of CDI
- Treatment completed in exploratory Phase 2 clinical trial
evaluating ridinilazole against fidaxomicin with top-line data
expected to be reported in Q2 2017
- Grant of key patent by the US Patent and Trademark Office
strengthens patent estate protecting ridinilazole
Operational
- R&D organisation strengthened by appointing industry
leader, Dr David Roblin, as Chief Operating Officer and President
of Research and Development; full-time role commences June
2017
Financial Highlights
- Cash and cash equivalents at 31 January 2017 of £28.1 million
compared to £16.3 million at 31 January 2016
- Loss for the year ended 31 January 2017 of £21.4 million
compared to a loss of £20.1 million for the year ended 31 January
2016
Conference Call and Webcast
InformationSummit will host a conference call and webcast
to review the financial results for the fiscal year ended 31
January 2017 today at 1:00pm BST / 8:00am EDT. To participate in
the conference call, please dial +44 (0)20 7136 2050(UK and
international participants) or +1 646 254 3361 (US local number)
and use the conference confirmation code 1859782. Investors may
also access a live audio webcast of the call via the investors
section of the Company’s website, www.summitplc.com. A replay of
the webcast will be available shortly after the presentation
finishes.
About Summit TherapeuticsSummit
is a biopharmaceutical company focused on the discovery,
development and commercialisation of novel medicines for
indications for which there are no existing or only inadequate
therapies. Summit is conducting clinical programmes focused on the
genetic disease Duchenne muscular dystrophy and the infectious
disease C. difficile infection. Further information is available at
www.summitplc.com and Summit can be followed on Twitter
(@summitplc).
For more information, please
contact:
Summit
Therapeutics Glyn Edwards / Richard Pye
(UK office)Erik Ostrowski / Michelle Avery (US office) |
Tel: +44 (0)1235 443
951 +1 617 225 4455 |
|
|
Cairn Financial
Advisers LLP (Nominated Adviser)Liam Murray / Tony
Rawlinson |
Tel: +44 (0)20 7213
0880 |
|
|
N+1
Singer (Broker)Aubrey Powell / Lauren Kettle |
Tel: +44 (0)20 7496
3000 |
|
|
MacDougall
Biomedical Communications(US media contact)Karen
Sharma |
Tel: +1 781 235 3060
ksharma@macbiocom.com |
|
|
Consilium
Strategic Communications (Financial public relations,
UK)Mary-Jane Elliott / Sue Stuart / Jessica Hodgson / Lindsey
Neville |
Tel: +44 (0)20 3709
5700summit@consilium-comms.com |
Forward Looking StatementsAny
statements in this press release about our future expectations,
plans and prospects, including statements about development and
potential commercialisation of our product candidates, the
therapeutic potential of our product candidates, the timing of
initiation, completion and availability of data from clinical
trials, the potential benefits and future operation of the
collaboration with Sarepta Therapeutics Inc., including any
potential future payments thereunder, any other potential
third-party collaborations and expectations regarding the
sufficiency of our cash balance to fund operating expenses and
capital expenditures, 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
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 will be
indicative of the results of later clinical trials, expectations
for regulatory approvals, availability of funding sufficient for
our foreseeable and unforeseeable operating expenses and capital
expenditure requirements and other factors discussed in the "Risk
Factors" section of filings that we make with the Securities and
Exchange Commission, including our Annual Report on Form 20-F for
the fiscal year ended 31 January 2016. In addition, any
forward-looking statements included in this press release represent
our views only as of the date of this release and should not be
relied upon as representing our views as of any subsequent date. We
specifically disclaim any obligation to update any forward-looking
statements included in this press release.
CHAIRMAN’S STATEMENT
The past year has been one of strong progress
across the Company as we continue to advance our innovative drug
programmes targeting rare and infectious diseases. Our focus in
rare diseases is on our utrophin modulator pipeline for the
treatment of the fatal muscle wasting disease, Duchenne muscular
dystrophy (‘DMD’). In infectious diseases, we are developing a
novel antibiotic called ridinilazole for the treatment of patients
with infections caused by the bacteria C. difficile.
A major highlight of the year was the signing of
a licence and collaboration agreement with Sarepta Therapeutics
Inc. (‘Sarepta’) for European rights to our utrophin modulator
pipeline. This agreement provided a $40 million upfront cash
payment to Summit with the potential for substantial future success
based milestone and royalty payments. The year also included
positive clinical data in both our DMD and CDI programmes as we
continue to progress these innovative therapies through clinical
trials and towards potential commercialisation.
This progress leaves us poised for an exciting
year ahead. This is expected to include the continuation of our
Phase 2 proof of concept trial for our lead utrophin modulator,
ezutromid, and activities to prepare our novel antibiotic
ridinilazole to be ready to enter Phase 3 clinical trials in the
first half of 2018.
A Balanced Portfolio
I believe our pipeline of investigational
therapies provides a balanced risk profile. Our DMD programme aims
to address the underlying cause of the disease by seeking to
maintain production of utrophin protein to compensate for the
dystrophin that is lacking in individuals with DMD, in order to
maintain healthy muscle function. We have shown the potential of
this therapeutic approach in preclinical disease models and our
focus is on demonstrating proof of concept in patients with DMD for
ezutromid in the ongoing Phase 2 clinical trial called PhaseOut
DMD. Generation of positive clinical data would clear a key
technical milestone and support the continued development of
ezutromid as a potential disease modifying treatment for this
devastating muscle wasting disease.
To complement this, our novel class antibiotic
ridinilazole has already shown evidence of clinical efficacy in
patients with CDI in our Phase 2 clinical trial. In my view, this
leaves ridinilazole in a strong position to continue to progress to
Phase 3 clinical development and towards potential regulatory
approval, particularly in light of the historic clinical success of
antibiotics that have generated positive Phase 2 data.
Operational Progress: Sarepta
Therapeutics Licence and Collaboration AgreementA major
achievement of the past year was signing the licence and
collaboration agreement with Sarepta. This agreement granted
Sarepta exclusive commercial rights in Europe, Turkey and the
Commonwealth of Independent States to our utrophin modulator
pipeline, including our Phase 2 candidate ezutromid. In exchange,
we benefited from a cash injection of $40 million with the
potential for additional development, regulatory and sales
milestones that for ezutromid alone total up to $522 million, plus
future sales royalties.
This deal brings to Summit a number of benefits.
It provides access to additional development and regulatory
expertise from Sarepta to support ezutromid and our wider utrophin
pipeline while, importantly, we retained full commercial rights in
other territories including the United States.
Operational Progress: R&D
overviewIt is an important time ahead for both programmes.
In DMD, we expect to conclude enrolment into PhaseOut DMD. This
clinical trial is the first long-term study conducted with a
utrophin modulator, and aims to demonstrate proof of concept for
ezutromid in patients with DMD. Proof of concept would represent a
major technical milestone for our utrophin modulation programme and
we look forward to reporting the full 24-week data from this trial
in the first quarter of 2018.
In parallel, we continue to develop our earlier
stage pipeline of future generation utrophin modulators. This
pipeline shows our deep commitment to developing effective
therapies for the DMD community. I look forward to reporting on the
continued advance of this pipeline which is being developed as part
of our strategic alliance with the University of Oxford as we seek
to maintain our leadership position in the field of utrophin
modulation.
There is an urgent need to develop new
antibiotics to combat the serious healthcare threat posed by
pathogens, including C. difficile. We continue to believe that
ridinilazole offers the potential to change the treatment paradigm
in CDI. Further data we presented from our proof of concept Phase 2
trial showed ridinilazole was highly preserving of the gut
microbiome in patients during treatment. This observation was in
stark contrast to patients treated with the current standard of
care antibiotic vancomycin whose microbiomes were severely damaged
during treatment. A damaged microbiome leaves patients at high risk
from disease recurrence. We therefore believe ridinilazole has the
potential to be positioned as the mainstay treatment for CDI due to
its potential to treat initial infection and reduce rates of
recurrence.
Future Development StrategyOur
strategy for the future development of both programmes remains
clear. In DMD, if any of our utrophin modulators receive marketing
approval, we remain committed to independently commercialising them
in the United States, one of the world’s most important
pharmaceutical markets. Commercialisation options for the other
territories not covered by the licence and collaboration agreement
with Sarepta continue to be evaluated.
As ridinilazole is prepared for entry into Phase
3 clinical trials, we are in parallel evaluating various options to
support its future development as we seek to maximise the value of
this exciting asset. This includes a collaboration agreement with a
third party, or securing substantial non-dilutive funding from
government entities or not for profit organisations. This
evaluation will consider a number of factors as we seek to identify
the optimal path to continue the development of
ridinilazole.
OperationalTo support the
ongoing development of the two programmes, the team was further
strengthened during the year. This was highlighted by the full-time
appointment of Dr David Roblin as our Chief Operating Officer and
President of Research and Development. David has had an extensive
and highly successful career in the pharmaceutical industry that
included holding senior management roles at Pfizer and Bayer. Most
recently, David led the establishment of operations at the Francis
Crick Institute in London as Chief Operating Officer. David’s broad
expertise across all stages of drug development in many different
therapeutic areas, including infectious diseases, will be
invaluable to the wider team at Summit. David has been acting as a
research and development adviser to Summit since 2014, and we look
forward to working with him as part of the Summit team in this role
on a part-time basis starting in April 2017 before moving to
full-time in June 2017. For Summit to have attracted an individual
of David’s calibre and reputation is a reflection of the promise
and innovation in our DMD and CDI programmes.
Summary and OutlookSummit has
made strong progress with the programmes and the development of the
business in 2016 and we look forward to an exciting year ahead. We
will continue with our proof of concept trial for ezutromid while
activities to prepare ridinilazole for Phase 3 clinical trials
continue.
I would like to thank all of our shareholders
for their continued support. I also wish to sincerely thank all the
patients and their families who are involved with our clinical
trials. Without their dedication and support, we would not be able
to advance these potential new treatments. Finally I would like to
thank the team at Summit for the continued hard work over the past
12 months as we seek to advance potential new medicines that have
the opportunity to transform the lives of patients and their
families.
Frank Armstrong, FRCPE,
FFPMNon-Executive Chairman
OPERATIONAL REVIEW
Summit is a biopharmaceutical company focused on
the discovery, development and commercialisation of novel medicines
for indications in rare diseases and infectious diseases for which
there are no existing or only inadequate therapies. In rare
diseases, Summit is seeking to develop a treatment for all patients
affected with the fatal disorder DMD using its utrophin modulation
technology. Summit’s focus in infectious diseases is on advancing
the development of an antibiotic called ridinilazole that has the
potential to not only treat the initial CDI infection, but
importantly to reduce rates of disease recurrence.
Duchenne Muscular Dystrophy: Utrophin
Modulation Programme
DMD is the most common and most severe form of
muscular dystrophy. There are approximately 50,000 patients with
DMD in the developed world. The disease predominately affects males
and results in the progressive wasting of muscles throughout the
body. DMD typically results in death by the time patients reach
their late twenties.
Patients with DMD are unable to produce
dystrophin, a protein essential for maintaining healthy muscle
function. Utrophin is a naturally occurring protein that is
functionally and structurally similar to dystrophin, and plays an
active role in the development of new muscle fibres, both in foetal
development and in the repair of damaged muscle fibres. Utrophin
production is switched off in mature muscle fibres, and in the case
of a healthy individual, replaced by the production of dystrophin.
Utrophin modulation has the potential to maintain the production of
utrophin in all skeletal muscles, including the diaphragm and the
heart, to compensate for the lack of dystrophin in patients with
DMD and so restore and maintain healthy muscle function. A key
benefit of utrophin modulation is that it is independent of the
underlying genetic fault in the dystrophin gene and therefore has
the potential to treat the entire patient population.
Summit has established a leadership position in
the field of utrophin modulation and is developing a pipeline of
small molecule utrophin modulator therapies, including ezutromid
which is being evaluated in a Phase 2 clinical trial.
Exclusive Licence and Collaboration
Agreement with Sarepta Therapeutics Inc. (‘Sarepta’)
In October 2016, Summit announced a licence and
collaboration agreement with Sarepta. This granted Sarepta
exclusive commercial rights to the Company’s utrophin modulator
pipeline, including ezutromid, in Europe, Turkey and the
Commonwealth of Independent States, with an option over specific
countries in Central and South America. Summit retains
commercialisation rights in all other countries, including the US
and Japan.
Under the agreement, Summit has agreed to
collaborate with Sarepta on the research and development of
utrophin modulator therapies under a joint, global development
plan. This agreement also provides Summit with access to Sarepta’s
development, regulatory and commercialisation expertise to support
the continuing development of Summit’s utrophin modulator
pipeline.
Financially, Summit received an upfront payment
of $40 million, and will be eligible for future ezutromid-related
development, regulatory and sales milestone payments totalling up
to $522 million. This includes a $22 million milestone, payable on
or after 1 April 2017, upon the first dosing of the last patient in
Summit’s ongoing PhaseOut DMD trial. In addition, Summit is
eligible for escalating royalties ranging from a low to high teens
percentage of net sales in the licensed territories.
Summit will also be eligible to receive
development and regulatory milestones related to potential future
generation utrophin modulator candidate(s). Beginning in 2018,
Summit and Sarepta will share at a 55%/45% split specified global
research and development costs related to Summit’s utrophin
modulator pipeline, including ezutromid and its future generation
utrophin modulator candidate(s).
Ezutromid Clinical Trial
Activities
Ezutromid: Phase 2 Proof of Concept
TrialPhaseOut DMD is a Phase 2 clinical trial evaluating ezutromid
in patients with DMD. This 48-week open-label trial is ongoing in
the UK and the US and aims to establish proof of concept for
ezutromid through the evaluation of muscle structure and health.
Enrolment of approximately 40 patients is ongoing for the two
formulations of ezutromid being tested, F3 and, more recently F6,
and Summit expects to complete trial enrolment in the second
quarter of 2017.
DMD is characterised by high levels of muscle
degeneration caused by the absence of functional dystrophin. Muscle
fibres consequently enter into a cycle of repair and degeneration
that over time leads to fat infiltrating into muscle and loss of
ambulation and other functional abilities. Ezutromid aims to
maintain production of utrophin so that it can substitute for the
missing dystrophin. This has potential to allow muscle fibres to
mature and so reduce the level of muscle degeneration, reduce the
rate of fat infiltration and reduce the rate of decline in
functional abilities. PhaseOut DMD is assessing all of these
factors through various techniques including use of muscle biopsy
to evaluate utrophin distribution and muscle fibre regeneration and
maturity; magnetic resonance imaging to measure fat infiltration;
and various functional tests including the North Star Ambulatory
Assessment and the six minute walk test.
The Company expects to report full analysis of
the 24-week biopsy data in the first quarter of 2018, in lieu of
reporting an earlier interim 24-week biopsy analysis from a smaller
group of these patients in 2017. The full analysis group consists
of approximately 20 samples from patients dosed with both the F3 or
F6 formulations of ezutromid who will provide a 24-week biopsy
sample. The Company plans to analyse all 24-week treatment biopsies
once all samples have been collected. In addition to reporting on
the full 24-week biopsy data, Summit expects to announce the
24-week analysis of MRI and functional data from all patients in
the trial. The Company believes that this revised approach of
analysing a larger dataset will provide a more complete picture of
ezutromid’s potential by evaluating a larger number of
patients.
In addition to PhaseOut DMD, Summit plans to
conduct a randomised, placebo controlled trial designed with the
potential to support accelerated and conditional approvals in the
US and Europe, respectively. It is anticipated that this trial
would start after positive interim data from PhaseOut DMD, and the
Company would plan to provide timing guidance following the release
of the 24-week dataset.
In March 2017, Summit applied to the MHRA and
FDA regulatory authorities to extend PhaseOut DMD as the Company
seeks to allow for the transition of patients participating in
PhaseOut DMD onto an open-label extension at the end of the initial
48 weeks of the trial without a cessation in dosing. This decision
followed support for the Company’s plan from the trial’s
independent Data Monitoring Committee upon an interim review of the
safety and tolerability data from the ongoing trial. The extension
phase is expected to last until ezutromid either receives marketing
approval in relevant countries or its development is
discontinued.
Ezutromid: Phase 1 New Formulation TrialSummit
announced in August 2016 results from a Phase 1 clinical trial that
showed a new formulation of ezutromid called F6 achieved a
substantial increase in plasma exposure in patients compared to the
current clinical formulation called F3. At the highest dose of F6
(1,000 mg, twice daily), the five evaluable patients achieved a
six-fold increase in average maximum plasma levels compared to the
highest dose of formulation F3 (2,500 mg, twice daily).
Summit is evaluating the safety and efficacy of
F6 alongside F3 in the ongoing PhaseOut DMD clinical trial. It is
anticipated that approximately ten patients enrolled at trial sites
in the US will be dosed with F6. We believe both formulations of
ezutromid have the potential to modulate the expression of
utrophin, and the inclusion of F6 is expected to provide a greater
understanding of the potential relationship between ezutromid drug
exposure and clinical benefit.
Pipeline and Research
Activities
Future Generation Utrophin ModulatorsAs part of
the Company’s strategy to maintain its leadership position in the
field of utrophin modulation, Summit is developing a pipeline of
future generation utrophin modulators. This research, conducted as
part of the strategic alliance with the University of Oxford, is
building on the promise of ezutromid to identify new, structurally
distinct molecules, including ones that may have new utrophin
related mechanisms.
Summit also has a number of second generation
utrophin modulators that are structurally related to ezutromid, but
designed to achieve higher drug plasma levels. In September 2016,
Summit placed the development of these modulators on hold as the
key objective of this development programme was fulfilled by the
substantial increase in ezutromid plasma levels achieved by the F6
formulation.
Development of BiomarkersAs highlighted above, a
key endpoint in the PhaseOut DMD trial is measurement of utrophin
and muscle regeneration biomarkers from muscle biopsies. Summit, in
collaboration with Flagship Biosciences Inc. (‘Flagship’), has been
developing an automated, digital analysis tool to precisely measure
muscle maturity and integrity and utrophin expression in individual
fibres, and data from this research were presented at the 21st
International Congress of the World Muscle Society held in Granada,
Spain, in October 2016. The Flagship research builds on a manual
quantification approach developed in collaboration by Summit and
research groups at the Institute of Child Health at University
College London, which was published in the peer reviewed literature
in March 2016. The development of these biomarkers represents an
important step in helping to further our understanding of the
potential benefits of utrophin modulator therapies such as
ezutromid.
Regulatory Updates
Fast Track and Rare Pediatric Disease
DesignationsIn September 2016, ezutromid was granted two separate
designations by the FDA in the treatment of DMD: Fast Track and
Rare Pediatric Disease. Fast Track designation provides the Company
with advantages such as opportunities for more frequent
interactions with the FDA during all aspects of development,
submission of a New Drug Application (‘NDA’) on a rolling basis,
and eligibility for accelerated approval and priority review. Rare
Pediatric Disease designation could qualify Summit for a Priority
Review Voucher if ezutromid is approved before 1 October 2022. The
voucher could be used for a subsequent marketing application or
sold or transferred an unlimited number of times (although only
used once).
C. difficile Infection
Programme
CDI is a major healthcare threat with over one
million cases estimated between the United States and Europe each
year. Mainstay treatments are dominated by broad spectrum
antibiotics, the use of which are associated with high rates of
recurrent disease. With each episode typically being more severe
and associated with increased risk of mortality, recurrent disease
is the key clinical issue in CDI.
Ridinilazole is a novel class antibiotic that
has the potential both to treat the initial infection as well as to
reduce the high rates of recurrent disease experienced in CDI.
Ridinilazole has received Qualified Infectious Disease Product
designation and has been granted Fast Track designation in the
US.
The development of ridinilazole has been
financially supported by Wellcome Trust Seeding Drug Discovery and
Translational Awards.
Phase 2 Clinical Programme
Summit has generated a comprehensive package of
data supporting ridinilazole as a potential new front-line
treatment of CDI. In the Phase 2 proof of concept trial, called
CoDIFy, ridinilazole achieved statistical superiority over the
current standard of care antibiotic vancomycin in sustained
clinical response, including a large numerical reduction in the
rate of recurrent disease.
Recurrence of CDI, and the failure to
subsequently achieve a sustained clinical response after treatment,
is a major issue in the management of the disease, as collateral
damage to the gut microbiome by antibiotics such as vancomycin
leaves patients vulnerable to disease recurrence.
Additional data reported during 2016 from CoDIFy
showed ridinilazole to be highly preserving of the gut microbiome
during the treatment for CDI when compared to vancomycin. In these
microbiome analyses, vancomycin inflicted significant damage to
several bacterial groups associated with a healthy microbiome and
caused a significant decrease in the total gut bacteria. In
contrast, ridinilazole did not decrease the healthy bacteria
analysed, nor the total bacteria, with some patients showing
initial signs of recovery in these key bacterial groups. In
addition, CoDIFy showed ridinilazole was associated with a greater
reduction in inflammatory disease markers compared to vancomycin in
patients with severe CDI.
In addition to CoDIFy, Summit has completed
treatment in an exploratory Phase 2 trial to evaluate ridinilazole
against the antibiotic fidaxomicin. This trial is intended to lead
to a greater understanding of the impact of ridinilazole on a
number of disease parameters, including its impact on the
microbiome. Summit expects to report top-line data, including
analysis of the microbiome, in the second quarter of 2017.
Regulatory Update and Planned Phase 3
Clinical Programme
In February 2017, Summit outlined its Phase 3
development programme for ridinilazole following input from the FDA
and European Medicines Agency. The Phase 3 programme is expected to
concentrate on evaluating ridinilazole’s potential superiority over
vancomycin as the Company seeks to differentiate this novel
antibiotic from currently marketed CDI treatments and those in
late-stage development. The Company plans to conduct two Phase 3
clinical trials evaluating ridinilazole compared to vancomycin,
with each trial expected to enrol approximately 700 patients with
CDI. The primary endpoint of the Phase 3 clinical trials is
expected to be superiority in sustained clinical response. Other
planned endpoints will include health economic outcome measures.
Activities to prepare ridinilazole for Phase 3 clinical trials
continue with these trials anticipated to start in the first half
of 2018.
Summit is currently exploring funding options
for the Phase 3 clinical development programme for ridinilazole and
various options to maximize the value of ridinilazole, including
potentially entering into a collaboration with a third party or
securing meaningful non-dilutive funding from government entities
and philanthropic, non-government and not for profit
organizations.
Preclinical Activities
In February 2016, preclinical data published in
the Journal of Antimicrobial Chemotherapy reported that
ridinilazole outperformed the current standards of care, vancomycin
and metronidazole, by having a robust killing effect on C.
difficile that significantly reduced the level of toxins produced
by the bacteria that play a major role in driving the symptoms and
severity of the disease. This study also showed that ridinilazole
halts C. difficile cell division, leading to ridinilazole’s
bactericidal activity.
Patent Grant
In April 2016, the patent estate protecting
ridinilazole was strengthened following grant of a composition of
matter patent covering ridinilazole by the United States Patent and
Trademark Office. The patent (United States Patent 9,314,456) is
entitled ‘Antibacterial Compounds’ and provides a period of
exclusivity for ridinilazole in the United States until at least 1
December 2029, with the possibility of patent term extension.
Operational Update
In January 2017, Dr David Roblin was appointed as Chief
Operating Officer (‘COO’) and President of Research &
Development. Dr Roblin has had a highly successful career in the
pharmaceutical industry, including senior leadership roles at
Pfizer and Bayer, which involved overseeing the research,
development and commercial launch of drugs across several therapy
areas including infectious diseases. Dr Roblin’s most recent role
was COO and Director of Scientific Translation at the Francis Crick
Institute, a London-based biomedical institute dedicated to
understanding the fundamental biology underlying health and
disease. Dr Roblin, who has been acting as a research and
development adviser to Summit since 2014, will take up his new role
on an interim basis in April 2017 with this becoming full-time in
June 2017.
FINANCIAL REVIEW
Revenue
As part of the exclusive licence and
collaboration agreement entered into with Sarepta, the Company
received an upfront payment of £32.8 million ($40.0 million). Of
this amount, £2.3 million has been recognised as revenue for the
year ended 31 January 2017. The remaining £30.5 million of the
upfront payment is classified as deferred income and will be
recognised as revenue over the development period. See Note 1, ‘New
accounting policy – Revenue Recognition.’
Other Operating Income
Other operating income decreased by 94.4% to
£0.07 million during the year ended 31 January 2017 from £1.3
million (adjusted – see Note 1 ‘Change in Accounting Policy’) for
the year ended 31 January 2016. Income attributed to the funding
agreement with the Wellcome Trust has now been recognised in full
with the completion of our CoDIFy Phase 2 clinical trial of
ridinilazole. Income recognised as part of the funding from
Innovate UK for the DMD programme decreased by £0.5 million to
£0.06 million for the year ended 31 January 2017 from
£0.6 million for the year ended 31 January 2016. The decrease
in income is in line with the achievement of milestones under the
funding agreement. Further, in September 2016, the Company elected
to withdraw from the Innovate UK funding agreement in order to
enable the Company to take advantage of more tax efficient
opportunities related to research and development expenditure.
Operating Expenses
Research and Development ExpensesResearch and
development expenses increased by £2.1 million, or 12.4%, to £19.0
million for the year ended 31 January 2017 from £16.9 million for
the year ended 31 January 2016. This was primarily due to
investment in the DMD programme which increased by £2.0 million to
£9.5 million from £7.5 million for the year ended 31 January 2016.
Investment in the CDI programme decreased by £1.5 million to £4.1
million for the year ended 31 January 2017 from £5.6 million for
the year ended 31 January 2016. Other research and development
expenses increased by £1.6 million during the period which is
primarily attributable to an increase in headcount within the DMD
and CDI project teams.
General and Administration ExpensesGeneral and
administration expenses increased by £3.5 million, or 73.5%, to
£8.3 million for the year ended 31 January 2017 from £4.8 million
for the year ended 31 January 2016. This increase included a £1.5
million increase in legal and professional expenses, an increase of
£0.7 million in staff related costs, an increase of £0.2 million in
share based payment expense, an increase of £0.1 million in
overhead and facility related costs and a net negative movement of
£1.0 million in exchange rate variance.
Finance CostsFollowing an IFRS Interpretations
Committee agenda decision in May 2016 on the application of IAS 20
'Government Grants,' the Company has changed its accounting policy
regarding charitable funding arrangements from the Wellcome Trust
and US Not for Profit organisations. The comparatives have been
adjusted following the change in accounting policy (see Note 1 –
‘Change in Accounting Policy’). Finance costs relate to the
subsequent re-measurement of the financial liability recognised in
respect of funding arrangements and the unwinding of the discounts
associated with the liabilities. Finance costs decreased by £2.0
million, or 70.1%, to £0.9 million for the year ended 31 January
2017 from £2.9 million for the year ended 31 January 2016
(adjusted) as there was not a subsequent re-measurement of the
financial liability during the year ended 31 January 2017, with
finance costs relating to the unwinding of the discount only.
During the year ended 31 January 2016, of the total finance cost of
£2.9 million, £2.6 million related to the re-measurement of the
financial liability following positive data in the DMD and CDI
clinical programmes that increased the probabilities of
success.
Taxation
Our income tax credit increased by £1.3 million,
or 41.8%, to £4.3 million for the year ended 31 January 2017 from
£3.0 million for the year ended 31 January 2016. This was as a
result of increased expenditure on research and development.
Losses
Losses before interest, tax, depreciation and
amortisation were £24.8 million for the year ended 31 January 2017
compared to £20.3 million for the year ended 31 January 2016. Net
loss for the year ended 31 January 2017 was £21.4 million with a
net loss per share of 35 pence compared to a net loss of £20.1
million for the year ended 31 January 2016 and a net loss per share
of 34 pence.
Cash Flows
The Group had a net cash inflow of £12.5 million
for the year ended 31 January 2017 as compared to a net cash inflow
of £4.9 million for the previous year.
For the year ended 31 January 2017, the Company
generated £12.1 million in cash from operating activities. This
compares to net cash used in operating activities of £17.2 million
for the year ended 31 January 2016. This net movement of £29.3
million was driven by the receipt of a £32.8 million ($40.0
million) upfront payment received as part of the exclusive licence
and collaboration agreement Summit entered into with Sarepta. This
positive inflow was offset by an increase in research and
development expenditure and general and administrative expenditure
during the year ended 31 January 2017. There was also a £1.6
million increase in the amount of research and development tax
credit received during the year ended 31 January 2017 which was
£3.0 million as compared to £1.4 million received during the year
ended 31 January 2016.
Net cash inflow from financing activities for
the year ended 31 January 2017 relates primarily to proceeds from
the exercise of warrants and the exercise of share options. Net
cash inflow from financing activities for the year ended 31 January
2016 primarily relates to the proceeds received from the sales of
our equity securities, net of expenses. The Company generated a net
cash inflow from financing activities of £0.4 million for the year
ended 31 January 2017 compared to £22.1 million for the year
ended 31 January 2016.
Financial Position
As at 31 January 2017, total cash and cash
equivalents held were £28.1 million compared to £16.3 million as at
31 January 2016.
The Company believes its existing cash and cash
equivalents, including an anticipated $22.0 million payment for a
near-term development milestone under the licence and collaboration
agreement with Sarepta, will be sufficient to enable it to fund its
operating expenses and capital expenditure requirements through to
31 December 2018.
Due to the recognition of deferred revenue
associated with the Sarepta agreement and the recognition of a
financial liability on funding arrangements resulting from a change
in accounting policy, the Consolidated Statement of Financial
Position has moved to a net liability position.
Headcount
Average headcount of the Group for the year was
44 (2016: 37).
Share Capital
In April 2016, warrants over 177,045 Ordinary
Shares were exercised raising net proceeds of £0.1 million.
During the year, 373,781 share options were
exercised raising net proceeds of £0.28 million.
On 22 February 2017, post the period under
review, the number of Ordinary Shares increased to 61,891,566
following the exercise of warrants by Oxford University Innovation
Limited (formerly Isis Innovation Limited) over 50,000 Ordinary
Shares at an exercise price of 20 pence per share. The issue raised
net proceeds of £0.01 million.
Glyn Edwards
Chief Executive Officer
Erik OstrowskiChief Financial Officer
29 March 2017
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(audited) For the year ended 31 January 2017
|
|
Twelve months ended 31
January2017 |
Twelvemonths ended 31 January
2017 |
Twelve months ended 31 January 2016 Adjusted |
|
Note |
$000s |
£000s |
£000s |
|
|
|
|
|
Revenue |
|
2,899 |
|
2,304 |
|
- |
|
|
|
|
|
|
Other operating
income |
|
90 |
|
72 |
|
1,281 |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Research and
development |
|
(23,851 |
) |
(18,952 |
) |
(16,856 |
) |
General and administration |
|
(10,417 |
) |
(8,277 |
) |
(4,771 |
) |
Total operating
expenses |
|
(34,268 |
) |
(27,229 |
) |
(21,627 |
) |
|
|
|
|
|
Operating
loss |
|
(31,279 |
) |
(24,853 |
) |
(20,346 |
) |
|
|
|
|
|
Finance
income |
|
10 |
|
8 |
|
30 |
|
Finance
cost |
|
(1,085 |
) |
(862 |
) |
(2,879 |
) |
|
|
|
|
|
Loss before
income tax |
|
(32,354 |
) |
(25,707 |
) |
(23,195 |
) |
|
|
|
|
|
Income
tax |
|
5,457 |
|
4,336 |
|
3,058 |
|
|
|
|
|
|
Loss for the
year |
|
(26,897 |
) |
(21,371 |
) |
(20,137 |
) |
|
|
|
|
|
Other
comprehensive income / (losses) |
|
|
|
|
Exchange
differences on translating foreign operations |
|
37 |
|
29 |
|
(41 |
) |
Total comprehensive loss for the year |
|
(26,860 |
) |
(21,342 |
) |
(20,178 |
) |
Basic and diluted loss per Ordinary Share from
operations |
2 |
(44)cents |
(35)pence |
(34)pence |
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited) For the three months ended 31 January 2017
|
|
Three months ended 31 January
2017 |
Three months ended 31 January
2017 |
Three months ended 31 January 2016 Adjusted |
|
Note |
$000s |
£000s |
£000s |
|
|
|
|
|
Revenue |
|
2,175 |
|
1,728 |
|
- |
|
|
|
|
|
|
Other operating
income |
|
- |
|
- |
|
223 |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Research and
development |
|
(6,030 |
) |
(4,792 |
) |
(4,997 |
) |
General and administration |
|
(3,810 |
) |
(3,027 |
) |
(1,393 |
) |
Total operating
expenses |
|
(9,840 |
) |
(7,819 |
) |
(6,390 |
) |
|
|
|
|
|
Operating
loss |
|
(7,665 |
) |
(6,091 |
) |
(6,167 |
) |
|
|
|
|
|
Finance
income |
|
1 |
|
1 |
|
6 |
|
Finance
cost |
|
(271 |
) |
(215 |
) |
(2,074 |
) |
|
|
|
|
|
Loss before
income tax |
|
(7,935 |
) |
(6,305 |
) |
(8,235 |
) |
|
|
|
|
|
Income
tax |
|
1,737 |
|
1,380 |
|
1,113 |
|
|
|
|
|
|
Loss for the
period |
|
(6,198 |
) |
(4,925 |
) |
(7,122 |
) |
|
|
|
|
|
Other
comprehensive losses |
|
|
|
|
Exchange
differences on translating foreign operations |
|
(18 |
) |
(14 |
) |
(39 |
) |
Total comprehensive loss for the period |
|
(6,216 |
) |
(4,939 |
) |
(7,161 |
) |
Basic and diluted loss per Ordinary Share from
operations |
2 |
(10)cents |
(8)pence |
(12)pence |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(audited)As at 31 January 2017
|
|
31 January2017 |
31
January 2017 |
31 January 2016 Adjusted |
|
|
$000s |
£000s |
£000s |
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Goodwill |
|
836 |
|
664 |
|
664 |
|
Intangible assets |
|
4,368 |
|
3,470 |
|
3,473 |
|
Property,
plant and equipment |
|
146 |
|
116 |
|
83 |
|
|
|
5,350 |
|
4,250 |
|
4,220 |
|
Current
assets |
|
|
|
|
Prepayments and other
receivables |
|
1,292 |
|
1,027 |
|
1,519 |
|
Current tax
receivable |
|
5,346 |
|
4,248 |
|
3,014 |
|
Cash and
cash equivalents |
|
35,316 |
|
28,062 |
|
16,304 |
|
|
|
41,954 |
|
33,337 |
|
20,837 |
|
|
|
|
|
|
Total assets |
|
47,304 |
|
37,587 |
|
25,057 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current
liabilities |
|
|
|
|
Deferred income |
4 |
(29,719 |
) |
(23,615 |
) |
- |
|
Financial liabilities
on income arrangements |
1 |
(7,449 |
) |
(5,919 |
) |
(5,034 |
) |
Provisions for other
liabilities and charges |
|
(107 |
) |
(85 |
) |
(73 |
) |
Deferred tax
liability |
|
(711 |
) |
(565 |
) |
(664 |
) |
|
|
(37,986 |
) |
(30,184 |
) |
(5,771 |
) |
Current
liabilities |
|
|
|
|
Trade and other
payables |
|
(5,016 |
) |
(3,984 |
) |
(3,206 |
) |
Deferred income |
|
(8,698 |
) |
(6,912 |
) |
- |
|
|
|
(13,714 |
) |
(10,896 |
) |
(3,206 |
) |
|
|
|
|
|
Total liabilities |
|
(51,700 |
) |
(41,080 |
) |
(8,977 |
) |
|
|
|
|
|
Net (liabilities) / assets |
|
(4,396 |
) |
(3,493 |
) |
16,080 |
|
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
|
778 |
|
618 |
|
613 |
|
Share premium
account |
|
58,420 |
|
46,420 |
|
46,035 |
|
Share-based payment
reserve |
|
6,463 |
|
5,136 |
|
3,757 |
|
Merger reserve |
|
(2,445 |
) |
(1,943 |
) |
(1,943 |
) |
Special reserve |
|
25,161 |
|
19,993 |
|
19,993 |
|
Currency translation
reserve |
|
63 |
|
50 |
|
21 |
|
Accumulated losses reserve |
|
(92,836 |
) |
(73,767 |
) |
(52,396 |
) |
Total (deficit) / equity |
|
(4,396 |
) |
(3,493 |
) |
16,080 |
|
CONSOLIDATED STATEMENT OF CASH FLOWS
(audited)For the year ended 31 January 2017
|
|
Twelve months ended31 January
2017 |
Twelve months ended31 January
2017 |
Twelve months ended31 January2016 Adjusted* |
|
|
$000s |
£000s |
£000s |
Cash flows from
operating activities |
|
|
|
|
Loss before income
tax |
|
(32,352 |
) |
(25,707 |
) |
(23,195 |
) |
|
|
|
|
|
Adjusted for: |
|
|
|
|
Finance income |
|
(10 |
) |
(8 |
) |
(30 |
) |
Finance cost |
|
1,085 |
|
862 |
|
2,879 |
|
Foreign exchange loss /
(gain) |
|
894 |
|
711 |
|
(169 |
) |
Depreciation |
|
60 |
|
48 |
|
38 |
|
Amortisation of
intangible fixed assets |
|
13 |
|
10 |
|
10 |
|
Movement in
provisions |
|
15 |
|
12 |
|
28 |
|
Research and
development expenditure credit |
|
(3 |
) |
(3 |
) |
(44 |
) |
Share-based payment |
|
1,735 |
|
1,379 |
|
1,160 |
|
Adjusted loss from
operations before changes in working capital |
|
(28,563 |
) |
(22,696 |
) |
(19,323 |
) |
|
|
|
|
|
Decrease in prepayments
and other receivables |
|
619 |
|
492 |
|
1,106 |
|
Increase in deferred
income |
|
38,419 |
|
30,527 |
|
- |
|
Increase
/ (decrease) in trade and other payables |
|
1,023 |
|
813 |
|
(366 |
) |
Cash generated from /
(used by) operations |
|
11,498 |
|
9,136 |
|
(18,583 |
) |
Taxation
received |
|
3,782 |
|
3,005 |
|
1,401 |
|
Net cash generated from / (used by) operating
activities |
|
15,280 |
|
12,141 |
|
(17,182 |
) |
|
|
|
|
|
Investing
activities |
|
|
|
|
Purchase of property,
plant and equipment |
|
(102 |
) |
(81 |
) |
(66 |
) |
Purchase of intangible
assets |
|
(9 |
) |
(7 |
) |
- |
|
Interest
received |
|
10 |
|
8 |
|
30 |
|
Net cash used in investing activities |
|
(101 |
) |
(80 |
) |
(36 |
) |
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds from issue of
share capital |
|
- |
|
- |
|
26,101 |
|
Transaction costs on
share capital issued |
|
- |
|
- |
|
(4,187 |
) |
Proceeds from exercise
of warrants |
|
135 |
|
107 |
|
- |
|
Proceeds from exercise
of share options |
|
356 |
|
283 |
|
222 |
|
Cash received from
funding arrangements accounted for as financial liabilities |
|
29 |
|
23 |
|
- |
|
Net cash generated from financing activities |
|
520 |
|
413 |
|
22,136 |
|
|
|
|
|
|
Increase in
cash and cash equivalents |
|
15,699 |
|
12,474 |
|
4,918 |
|
|
|
|
|
|
Effect of
exchange rates in cash and cash equivalents |
|
(902 |
) |
(716 |
) |
121 |
|
|
|
|
|
|
Cash and cash
equivalents at beginning of the year |
|
20,519 |
|
16,304 |
|
11,265 |
|
|
|
|
|
|
Cash and cash equivalents at end of
the year |
|
35,316 |
|
28,062 |
|
16,304 |
|
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY (audited)
Year ended 31 January 2017
Group |
|
Share capital£000s |
Share premium account£000s |
Share-based payment reserve£000s |
Merger reserve£000s |
Special reserve£000s |
Currencytranslationreserve£000s |
Accumulated losses reserve£000s |
Total £000s |
At 1 February 2016
(adjusted) |
|
613 |
46,035 |
3,757 |
(1,943 |
) |
19,993 |
21 |
(52,396 |
) |
16,080 |
|
Loss for
the year |
|
- |
- |
- |
- |
|
- |
- |
(21,371 |
) |
(21,371 |
) |
Currency
translation adjustment |
|
- |
- |
- |
- |
|
- |
29 |
- |
|
29 |
|
Total comprehensive
loss for the year |
|
- |
- |
- |
- |
|
- |
29 |
(21,371 |
) |
(21,342 |
) |
New share capital
issued from exercise of warrants |
|
2 |
105 |
- |
- |
|
- |
- |
- |
|
107 |
|
Share options
exercised |
|
3 |
280 |
- |
- |
|
- |
- |
- |
|
283 |
|
Share-based payment |
|
- |
- |
1,379 |
- |
|
- |
- |
- |
|
1,379 |
|
At 31
January 2017 |
|
618 |
46,420 |
5,136 |
(1,943 |
) |
19,993 |
50 |
(73,767 |
) |
(3,493 |
) |
Year ended 31 January 2016 (adjusted)
Group |
|
Share capital£000s |
Share premium account£000s |
Share-based payment reserve£000s |
Merger reserve£000s |
Special reserve£000s |
Currencytranslationreserve£000s |
Accumulated losses reserve£000s |
Total £000s |
At 1 February 2015 |
|
411 |
24,101 |
|
2,597 |
(1,943 |
) |
19,993 |
62 |
|
(32,259 |
) |
12,962 |
|
Loss for the year |
|
- |
- |
|
- |
- |
|
- |
- |
|
(20,137 |
) |
(20,137 |
) |
Currency
translation adjustment |
|
- |
- |
|
- |
- |
|
- |
(41 |
) |
- |
|
(41 |
) |
Total comprehensive
loss for the year |
|
- |
- |
|
- |
- |
|
- |
(41 |
) |
(20,137 |
) |
(20,178 |
) |
New share capital
issued |
|
198 |
25,903 |
|
- |
- |
|
- |
- |
|
- |
|
26,101 |
|
Transaction costs on
share capital issued |
|
- |
(4,187 |
) |
- |
- |
|
- |
- |
|
- |
|
(4,187 |
) |
Share options
exercised |
|
4 |
218 |
|
- |
- |
|
- |
- |
|
- |
|
222 |
|
Share-based payment |
|
- |
- |
|
1,160 |
- |
|
- |
- |
|
- |
|
1,160 |
|
At 31
January 2016 |
|
613 |
46,035 |
|
3,757 |
(1,943 |
) |
19,993 |
21 |
|
(52,396 |
) |
16,080 |
|
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 January 2017
1. Basis of Accounting
This financial information for the years ended
31 January 2017 and 31 January 2016 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 2017 and those financial statements will be delivered to
the Registrar of Companies following the Company’s 2017 Annual
General Meeting. Financial statements for the year ended 31
January 2016 have been delivered to the Registrar of Companies. The
financial statements for the years ended 31 January 2017 and 2016
contain an unqualified report from the Group’s auditors.
These financial statements have been prepared
assuming the Group will continue on a going-concern basis.
The consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (‘IFRS’) as issued by the International Accounting
Standards Board (‘IASB’) and as adopted by the European Union, IFRS
Interpretations Committee interpretations and the Companies Act
2006 applicable to companies reporting under IFRS. The Consolidated
Financial Statements have been prepared on a going concern basis
and under the historical cost convention.
Whilst the financial information included in
this preliminary announcement has been prepared in accordance with
IFRSs adopted for use in the European Union and as issued by the
International Accounting Standards Board, this announcement does
not itself contain sufficient information to comply with IFRSs.
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 2017 and 2016 is 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 2017
and in the Consolidated Statement of Comprehensive Income and
Consolidated Statement of Cash Flows for the year and 3 months
ended 31 January 2017 have been translated into US dollars at the
rate on 31 January 2017 of $1.2585 to £1.00. These translations
should not be considered representations that any such amounts have
been, could have been or could be converted into US dollars at that
or any other exchange rate as at that or any other date.
The Board of Directors of the Company approved
this statement on 29 March 2017.
Change in Accounting Policy – Financial
Liabilities on Funding Arrangements
Following an IFRS Interpretations Committee
agenda decision in May 2016 on the application of IAS 20
‘Accounting for Government Grants and Disclosure of Government
Assistance,’ the Company has changed its accounting policy
regarding charitable funding arrangements from the Wellcome Trust
and the US not for profit organisations, the Muscular Dystrophy
Association (‘MDA’) and Duchenne Partners Fund (‘DPF’), which has
resulted in an adjustment to the comparative financial
statements.
In exchange for the funding provided, these
arrangements require the Company to pay royalties on potential
future revenues generated from these projects and also give the
counterparties certain rights over the intellectual property if the
compound is not exploited. The IFRS Interpretations Committee
agenda decision has clarified that such arrangements result in a
financial liability. The estimate of each financial liability is
initially recognised at fair value using a discounted cash flow
model with the difference between the fair value of the liability
and the cash received considered to represent a charitable
grant.
When determining the fair value on initial
recognition, the significant assumptions in the models include the
estimation of the timing and the probability of successful
development leading to commercialisation of the project related
results and related estimates of future cash flows. Estimated
future cash flows include expected sources of revenue (including
commercial sales and upfront payments, milestone payments and
royalties from potential licensing arrangements) and are calculated
using estimated geographical market share and associated
pricing.
The financial liabilities are subsequently
measured at amortised cost using a discounted cash flow model which
calculates the risk adjusted net present values of estimated
potential future cash flows for the respective projects related to
the Wellcome Trust and MDA and DPF agreements. The financial
liabilities are re-measured when there is a specific significant
event that provides evidence of a significant change in the
probability of successful development such as the completion of a
phase of research or changes in use or market for a product. The
models will be updated for changes in the clinical probability of
success and other associated assumptions with the discount factor
to remain unchanged within the model.
Re-measurements of the financial liabilities are
recognised in the income statement as finance costs. Grant income
is recognised as other operating income in accordance with IAS 20,
‘Accounting for Government Grants and Disclosure of Government
Assistance,’ at the same time as the underlying expenditure is
incurred, provided that there is reasonable assurance that the
Group will comply with the conditions.
Amounts received from, and subsequent payments
to, the corresponding counterparty in the funding agreement which
relate to the financial liability will be presented within the
financing activities section in the Consolidated Statement of Cash
Flows.
This change in accounting policy has been
reflected retrospectively in these financial statements.
The impact of this change in accounting policy
on the consolidated financial statements is a reduction in other
income historically recognised, a change in the level of accrued
income accounted for as grant income and the recognition of a
financial liability and finance costs associated with the unwinding
of the discount and re-measurement of the liability.
Impact on Consolidated Interim Statement of Comprehensive
Income |
|
OriginalYear ended 31 January 2016£000 |
|
AdjustedYear ended 31 January 2016£000 |
|
Impact£000 |
Other
operating income |
|
1,451 |
|
|
1,281 |
|
|
(170 |
) |
Finance costs |
|
- |
|
|
(2,879 |
) |
|
(2,879 |
) |
|
|
1,451 |
|
|
(1,598 |
) |
|
(3,049 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact on Consolidated Statement of Financial
Position |
|
Original1 February 2015£000 |
|
Adjusted1 February 2015£000 |
|
Impact£000 |
Trade
and other payables |
|
(3,721 |
) |
|
(3,570 |
) |
|
151 |
|
Financial liabilities on funding arrangements |
|
- |
|
|
(2,155 |
) |
|
(2,155 |
) |
Accumulated losses reserve |
|
(30,255 |
) |
|
(32,259 |
) |
|
(2,004 |
) |
|
|
|
|
|
|
|
Impact on Consolidated Statement of Financial
Position |
|
Original31 January 2016£000 |
|
Adjusted 31 January 2016£000 |
|
Impact£000 |
Prepayments and other receivables |
|
1,538 |
|
|
1,519 |
|
|
(19 |
) |
Financial liabilities on funding arrangements |
|
- |
|
|
(5,034 |
) |
|
(5,034 |
) |
Accumulated losses reserve |
|
(47,343 |
) |
|
(52,396 |
) |
|
(5,053 |
) |
|
|
|
|
|
|
|
Impact on Consolidated Statement of Cash
Flows |
|
OriginalYear ended 31 January2016£000 |
|
AdjustedYear ended31 January 2016£000 |
|
Impact£000 |
Loss
before income tax |
|
(20,146 |
) |
|
(23,195 |
) |
|
(3,049 |
) |
Adjusted for: |
|
|
|
|
|
|
Finance costs |
|
- |
|
|
2,879 |
|
|
2,879 |
|
Decrease in trade and other payables |
|
(536 |
) |
|
(366 |
) |
|
170 |
|
Impact on net cash used in operating activities |
|
(20,682 |
) |
|
(20,682 |
) |
|
- |
|
New Accounting Policy – Revenue
Recognition
Revenue is measured at the fair value of the
consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of
business net of value added tax and other sales-related taxes. The
Group recognises revenue when the amount can be reliably measured;
when it is probable that future economic benefits will flow to the
Group; and when specific criteria have been met for each of the
Group’s activities.
Collaboration revenues consist of revenues
generated from collaborative research and development arrangements.
Such agreements may consist of multiple elements and provide for
varying consideration terms, such as upfront, development,
regulatory and sales milestones, and sales royalties and similar
payments. Where such arrangements can be divided into separate
units of accounting (each unit constituting a separate earnings
process), the arrangement consideration is allocated to the
different units based on their relative fair values and recognised
over the respective performance period.
Revenues from non-refundable, upfront payments
are assessed as to whether they relate to the provision of a
licence or development services. Upfront payments classified as the
provision of a licence are recognised in full immediately while
revenue related to further development services are initially
reported as deferred income on the Consolidated Statement of
Financial Position and are recognised as revenue over the
development period.
Development and regulatory approval milestone
payments are recognised as revenue based on the percentage of
completion method on the assumption that all stages will be
completed successfully, but with cumulative revenue recognised
limited to non-refundable amounts already received or reasonably
certain to be received.
Royalty revenue is recognised on an accrual
basis in accordance with the substance of the relevant agreement,
provided that it is probable that the economic benefits will flow
to the Group and the amount of revenue can be measured
reliably.
Sales related milestone payments are recognised
in full in the period in which the relevant milestone is
achieved.
2. Loss per Share
Calculation
The loss per Ordinary Share has been calculated
by dividing the loss for the period by the weighted average number
of Ordinary Shares in issue during the twelve month period to 31
January 2017: 61,548,557 and during the three month period to 31
January 2017: 61,819,596 (for the twelve month period to 31 January
2016: 59,102,292 and for the three month period to 31 January 2016:
61,290,740).
Since the Group has reported a net loss, diluted
loss per ordinary share is equal to basic loss per ordinary
share.
3. Issue of Share Capital
On 14 April 2016, the number of Ordinary Shares
increased to 61,467,785 following the exercise of warrants over
177,045 Ordinary Shares at an exercise price of 60
pence per share. The issue of shares raised net proceeds of
£107,000.
During the year to 31 January 2017 the following
exercise of share options took place:
Date |
Number of options exercised |
28 June 2016 |
16,667 |
6 October 2016 |
238,804 |
7 October 2016 |
77,500 |
14 October 2016 |
3,560 |
24 October 2016 |
11,000 |
19
January 2017 |
26,250 |
|
373,781 |
The total net proceeds from exercised share
options during the year was £0.28 million.
Following the exercise of the above share
options, the number of Ordinary Shares in issue was 61,841,566.
Post year end, on 22 February 2017, the number
of Ordinary Shares increased to 61,891,566 following the exercise
of warrants by Oxford University Innovation Limited, formerly known
as Isis Innovation Limited, over 50,000 Ordinary Shares at an
exercise price of 20 pence per share. The issue raised net proceeds
of £10,000.
4. Licence and Collaboration Agreement
with Sarepta Therapeutics Inc.
On 4 October 2016, Summit announced its entry
into an exclusive licence and collaboration agreement (the
‘Agreement‘) with Sarepta Therapeutics Inc. (‘Sarepta‘), pursuant
to which the Company granted Sarepta the exclusive right to
commercialise products in the Company’s utrophin modulator pipeline
in the European Union, Switzerland, Norway, Iceland, Turkey and the
Commonwealth of Independent States (the ’Licensed Territory‘). Such
products include the Company’s lead product candidate, ezutromid,
for the treatment of Duchenne muscular dystrophy and its second
generation and future generation small molecule utrophin
modulators. The Company also granted Sarepta an option to expand
the Licensed Territory to include certain countries in Latin
America. The Company retains commercialisation rights in the rest
of the world. Under the terms of the Agreement, Summit received an
upfront payment of $40.0 million (£32.8 million) from Sarepta which
has been initially reported as deferred income on the Consolidated
Statement of Financial Position and is being recognised as revenue
over the development period. In addition, the Company will be
eligible to receive specified development, regulatory and potential
sales milestones related to ezutromid and Summit’s second
generation and future generation small molecule utrophin
modulators. Summit is also eligible for escalating royalties
ranging from a low to high teens percentage of net sales in the
Licensed Territories.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR).
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