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 unaudited financial results for the first quarter
ended 30 April 2017.
Mr Glyn Edwards, Chief Executive Officer
of Summit, commented: “Over the past quarter and in recent
months, we have made meaningful advances in both our DMD and CDI
programmes to bring these programmes closer to the patients in
need. We continue to progress our PhaseOut DMD clinical trial of
our lead utrophin modulator, ezutromid, in the treatment of DMD. We
achieved a major milestone in the programme with the completion of
enrolment into PhaseOut DMD, triggering a $22 million payment from
Sarepta. In addition, we have made provisions for patients in the
trial to remain on ezutromid beyond the initial 48-weeks of the
trial, which will allow us to monitor safety and efficacy data
related to longer-term dosing. We look forward to reporting 24-week
biopsy, MRI and functional data in the first quarter of 2018 for
what could be the first disease modifying treatment for all
patients with DMD.
“As we continue to prepare our other lead
product candidate, ridinilazole, for Phase 3 clinical development,
a recent Lancet Infectious Diseases publication highlighted the
novel antibiotic’s differentiation and promise as a potential
treatment for CDI, as evidenced by the Phase 2 CoDIFy clinical
data. We believe the robust design of the Phase 3 clinical
programme, which has received input from the US Food and Drug
Administration and European Medicines Agency, has the potential to
underpin ridinilazole as a potential front-line treatment for
CDI.”
Utrophin Modulation Programme for
DMD
Ezutromid Highlights
- Completed enrolment into PhaseOut DMD in May 2017. PhaseOut DMD
is a 48-week, open label Phase 2 clinical trial that has enrolled
40 patients at sites in the UK and US. The trial aims to establish
proof of concept of ezutromid and is evaluating a range of muscle
structure, muscle health and functional endpoints.
- Expecting to report full 24-week data analysis from PhaseOut
DMD in Q1 2018. This data set will include 24-week biopsy data from
all patients who provide a 24-week biopsy sample (approximately
20). In addition, Summit expects to report 24-week MRI and
functional data from all 40 patients in the trial. Top-line data
from the complete 48-week clinical trial are expected in Q3
2018.
- Received support from an Independent Data Monitoring Committee
for the extension of PhaseOut DMD following its interim review of
safety and tolerability data. The extension phase will allow Summit
to continue to gather long-term safety and efficacy data and is
expected to last until ezutromid either receives marketing approval
in relevant countries or its development is discontinued. In May
2017, Summit received the necessary regulatory approvals for the
extension phase.
CDI Programme
Ridinilazole Highlights
- Outlined Phase 3 development programme for the novel antibiotic
ridinilazole following input from the US Food and Drug
Administration and European Medicines Agency. The primary endpoint
of the Phase 3 trials is expected to test for superiority in
sustained clinical response compared to vancomycin as the Company
seeks to further differentiate ridinilazole from currently marketed
CDI treatments and those in late-stage development. Preparation for
the Phase 3 clinical trials is ongoing with the trials planned to
start H1 2018.
- Continuing to explore various funding options for the Phase 3
development programme as the Company seeks to maximize the value of
ridinilazole. Options include 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 organisations.
- Published Phase 2 CoDIFy clinical trial results in The Lancet
Infectious Diseases. CoDIFy evaluated ridinilazole against the
standard of care antibiotic, vancomycin, for the treatment of CDI.
The results showed ridinilazole demonstrated substantial clinical
benefit over vancomycin. This included ridinilazole achieving
statistical superiority over vancomycin in sustained clinical
response, a composite endpoint of cure at the end of treatment and
no recurrence 30 days after treatment, a result which was driven by
a large numerical reduction in recurrent disease.
- Planning to report data from an exploratory Phase 2 clinical
trial evaluating ridinilazole against the antibiotic fidaxomicin
later this year. A key objective of the trial is to determine the
relative impact on the patients’ microbiomes of treatment with
ridinilazole compared to fidaxomicin.
Operational
- Strengthened R&D team with Chief Operating Officer Dr David
Roblin expanding his role to include serving as Chief Medical
Officer and appointments of Dr Anne Heatherington as Head of
Clinical Development and Quantitative Sciences and Dr Dave Powell
as Head of Research. These appointments, announced in May 2017,
will help ensure the Company has the leadership, depth of knowledge
and expertise needed to support its clinical and preclinical
pipeline.
Financial Highlights
- Cash and cash equivalents at 30 April 2017 of £19.4 million
compared to £28.1 million at 31 January 2017.
- $22 million milestone payment to Summit triggered in May 2017,
post the period under review, under the terms of the licence and
collaboration agreement with Sarepta Therapeutics Inc.
(‘Sarepta’).
- Loss for the three months ended 30 April 2017 of £4.8 million
compared to a loss of £5.4 million for the three months ended 30
April 2016.
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: |
|
|
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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 2017. 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.
FINANCIAL REVIEW
Revenue
Revenue was £1.7 million for the three months
ended 30 April 2017 compared to £nil for the three months ended 30
April 2016. This increase resulted from the exclusive licence and
collaboration agreement entered into with Sarepta in October 2016,
from which the Company received an upfront payment of £32.8 million
($40 million). Of this amount £4.0 million in the aggregate has
been recognised to date. The remaining £28.8 million of the upfront
payment is classified as deferred revenue and will continue to be
recognised as revenue over the development period.
Other Operating Income
There were no sources of other operating income
during the three months ended 30 April 2017 compared to £0.06
million recognised during the three months ended 30 April 2016. The
decrease is due to the Company’s withdrawal from the Innovate UK
funding agreement in September 2016 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 £0.2 million to £5.0 million for
the three months ended 30 April 2017 from £4.8 million for the
three months ended 30 April 2016. The increase is driven by an
overall increase in investment in the DMD programme of £0.7 million
and an increase of £0.1 million in research and development related
staffing costs offset by a decrease in CDI clinical programme
related activities of £0.6 million.
General and Administration ExpensesGeneral and
administration expenses increased by £1.0 million to £2.4 million
for the three months ended 30 April 2017 from £1.4 million for the
three months ended 30 April 2016. This increase was primarily due
to a net negative movement of £0.5 million in exchange rate
variance, an increase of £0.3 million in staff related costs and an
increase of £0.2 million in legal and professional fees.
Finance CostsFollowing an International
Financial Reporting Standards Interpretations Committee agenda
decision in May 2016 on the application of International Accounting
Standards 20 'Government Grants,' the Company has changed its
accounting policy regarding charitable funding arrangements from
the Wellcome Trust and US not for profit organisations for the year
ended 31 January 2017. See Note 1 – ‘Change in accounting policy’
below. This change in accounting policy has been reflected
retrospectively in the comparative financial statements for the
three months ended 30 April 2016. Finance costs relate to the
subsequent re-measurement of the financial liability recognised in
respect of income arrangements and the unwinding of the discounts
associated with the liabilities. Finance costs remained consistent
at £0.2 million for the three months ended 30 April 2017 and for
the three months ended 30 April 2016 (adjusted).
Cash Flows
Operating ActivitiesNet cash used in operating
activities for the three months ended 30 April 2017 was £8.0
million compared to £6.4 million for the three months ended 30
April 2016. This movement of £1.6 million was driven by an increase
in research and development expenses and general and administrative
expenses during the three months ended 30 April 2017.
Investing ActivitiesNet cash used in investing
activities for the three months ended 30 April 2017 was £0.3
million compared to £4,000 for the three months ended 30 April
2016. This includes the net amount of bank interest received on
cash deposits less amounts paid to acquire property, plant and
equipment. During the three months ended 30 April 2017, the Group
relocated its UK offices.
Financing ActivitiesNet cash inflow from
financing activities for the three months ended 30 April 2017 of
£0.01 million relates to proceeds from the exercise of warrants and
the exercise of share options. For the three months ended 30 April
2016, the Company received proceeds of £0.1 million from the
exercise of warrants.
Financial position
As at 30 April 2017, total cash and cash
equivalents were £19.4 million compared to £28.1 million at 31
January 2017.
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 continues to be in a net liability position.
Glyn Edwards |
Erik Ostrowski |
|
Chief Executive
Officer |
Chief Financial Officer |
14 June 2017
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited) For the three months ended 30 April 2017 |
|
|
|
|
|
|
|
Three months ended 30 April 2017 |
Three months ended 30 April
2017 |
Three months ended 30 April 2016 Adjusted* |
|
Note |
$000s |
£000s |
£000s |
|
|
|
|
|
Revenue |
|
2,236 |
|
1,728 |
|
- |
|
|
|
|
|
|
Other operating
income |
|
- |
|
- |
|
59 |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Research and
development |
|
(6,515 |
) |
(5,035 |
) |
(4,806 |
) |
General and administration |
|
(3,149 |
) |
(2,434 |
) |
(1,432 |
) |
Total operating
expenses |
|
(9,664 |
) |
(7,469 |
) |
(6,238 |
) |
|
|
|
|
|
Operating
loss |
|
(7,428 |
) |
(5,741 |
) |
(6,179 |
) |
|
|
|
|
|
Finance
income |
|
2 |
|
1 |
|
3 |
|
Finance
cost |
1 |
(290 |
) |
(224 |
) |
(194 |
) |
|
|
|
|
|
Loss before
income tax |
|
(7,716 |
) |
(5,964 |
) |
(6,370 |
) |
|
|
|
|
|
Income
tax |
|
1,556 |
|
1,203 |
|
935 |
|
|
|
|
|
|
Loss for the
period |
|
(6,160 |
) |
(4,761 |
) |
(5,435 |
) |
|
|
|
|
|
Other
comprehensive loss |
|
|
|
|
Items that may be
reclassified subsequently to profit or loss |
|
|
|
|
Exchange
differences on translating foreign operations |
|
(20 |
) |
(15 |
) |
(5 |
) |
Total comprehensive loss for the period |
|
(6,180 |
) |
(4,776 |
) |
(5,440 |
) |
Basic and diluted loss per Ordinary Share from
operations |
2 |
(10)cents |
(8)pence |
(9)pence |
* See Note 1 – ‘Change in accounting policy’
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited) As at 30 April 2017 |
|
|
|
|
|
|
|
30
April2017 |
30
April 2017 |
31 January 2017 |
|
|
|
|
|
|
Note |
$000s |
£000s |
£000s |
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Goodwill |
|
859 |
|
664 |
|
664 |
|
Intangible assets |
|
4,440 |
|
3,432 |
|
3,470 |
|
Property,
plant and equipment |
|
611 |
|
472 |
|
116 |
|
|
|
5,910 |
|
4,568 |
|
4,250 |
|
Current
assets |
|
|
|
|
Prepayments and other
receivables |
|
1,952 |
|
1,509 |
|
1,027 |
|
Current tax
receivable |
|
7,071 |
|
5,466 |
|
4,248 |
|
Cash and
cash equivalents |
|
25,050 |
|
19,362 |
|
28,062 |
|
|
|
34,073 |
|
26,337 |
|
33,337 |
|
|
|
|
|
|
Total assets |
|
39,983 |
|
30,905 |
|
37,587 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current
liabilities |
|
|
|
|
Deferred revenue |
|
(28,317 |
) |
(21,887 |
) |
(23,615 |
) |
Financial liabilities
on funding arrangements |
1 |
(7,948 |
) |
(6,143 |
) |
(5,919 |
) |
Provisions for other
liabilities and charges |
|
(129 |
) |
(100 |
) |
(85 |
) |
Deferred tax
liability |
|
(731 |
) |
(565 |
) |
(565 |
) |
|
|
(37,125 |
) |
(28,695 |
) |
(30,184 |
) |
Current
liabilities |
|
|
|
|
Trade and other
payables |
|
(4,130 |
) |
(3,192 |
) |
(3,984 |
) |
Provisions for other
liabilities and charges |
|
(110 |
) |
(85 |
) |
- |
|
Deferred revenue |
|
(8,942 |
) |
(6,912 |
) |
(6,912 |
) |
|
|
(13,182 |
) |
(10,189 |
) |
(10,896 |
) |
|
|
|
|
|
Total liabilities |
|
(50,307 |
) |
(38,884 |
) |
(41,080 |
) |
|
|
|
|
|
Net liabilities |
|
(10,324 |
) |
(7,979 |
) |
(3,493 |
) |
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
|
801 |
|
619 |
|
618 |
|
Share premium
account |
|
60,073 |
|
46,432 |
|
46,420 |
|
Share-based payment
reserve |
|
7,003 |
|
5,413 |
|
5,136 |
|
Merger reserve |
|
(2,513 |
) |
(1,943 |
) |
(1,943 |
) |
Special reserve |
|
25,867 |
|
19,993 |
|
19,993 |
|
Currency translation
reserve |
|
45 |
|
35 |
|
50 |
|
Accumulated losses reserve |
|
(101,600 |
) |
(78,528 |
) |
(73,767 |
) |
Total deficit |
|
(10,324 |
) |
(7,979 |
) |
(3,493 |
) |
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
For the three months ended 30 April 2017 |
|
|
|
|
|
|
|
Three months ended
30 April 2017 |
Three months ended
30 April 2017 |
Three months ended30 April 2016 Adjusted* |
|
|
|
|
|
|
|
$000s |
£000s |
£000s |
Cash flows from
operating activities |
|
|
|
|
Loss before income
tax |
|
(7,716 |
) |
(5,964 |
) |
(6,370 |
) |
|
|
|
|
|
Adjusted for: |
|
|
|
|
Finance income |
|
(1 |
) |
(1 |
) |
(3 |
) |
Finance cost |
|
290 |
|
224 |
|
194 |
|
Foreign exchange
loss |
|
612 |
|
473 |
|
45 |
|
Depreciation |
|
30 |
|
23 |
|
11 |
|
Amortisation of
intangible fixed assets |
|
3 |
|
2 |
|
2 |
|
Loss on disposal of
assets |
|
48 |
|
37 |
|
- |
|
Movement in
provisions |
|
- |
|
- |
|
7 |
|
Research and
development expenditure credit |
|
- |
|
- |
|
(3 |
) |
Share-based payment |
|
358 |
|
277 |
|
336 |
|
Adjusted loss from
operations before changes in working capital |
|
(6,376 |
) |
(4,929 |
) |
(5,781 |
) |
|
|
|
|
|
Increase in prepayments
and other receivables |
|
(624 |
) |
(482 |
) |
(509 |
) |
Decrease in deferred
revenue |
|
(2,236 |
) |
(1,728 |
) |
- |
|
Decrease
in trade and other payables |
|
(1,034 |
) |
(798 |
) |
(78 |
) |
Cash used by
operations |
|
(10,270 |
) |
(7,937 |
) |
(6,368 |
) |
|
|
|
|
|
Taxation
paid |
|
(19 |
) |
(15 |
) |
- |
|
|
Net cash used by operating activities |
|
(10,289 |
) |
(7,952 |
) |
(6,368 |
) |
|
|
|
|
|
Investing
activities |
|
|
|
|
Purchase of property,
plant and equipment |
|
(362 |
) |
(280 |
) |
(7 |
) |
Interest
received |
|
1 |
|
1 |
|
3 |
|
Net cash used in investing activities |
|
(361 |
) |
(279 |
) |
(4 |
) |
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds from exercise
of warrants |
|
13 |
|
10 |
|
107 |
|
Proceeds from exercise
of share options |
|
4 |
|
3 |
|
- |
|
Net cash generated from financing activities |
|
17 |
|
13 |
|
107 |
|
|
|
|
|
|
Decrease in
cash and cash equivalents |
|
(10,633 |
) |
(8,218 |
) |
(6,265 |
) |
|
|
|
|
|
Effect of
exchange rates in cash and cash equivalents |
|
(624 |
) |
(482 |
) |
(50 |
) |
|
|
|
|
|
Cash and cash
equivalents at beginning of the period |
|
36,307 |
|
28,062 |
|
16,304 |
|
|
|
|
|
|
Cash and cash equivalents at end of the
period |
|
25,050 |
|
19,362 |
|
9,989 |
|
* See Note 1 – ‘Change in accounting policy’
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY (unaudited)Three months ended 30 April
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 2017 |
|
618 |
46,420 |
5,136 |
(1,943 |
) |
19,993 |
50 |
|
(73,767 |
) |
(3,493 |
) |
Loss for the
period |
|
- |
- |
- |
- |
|
- |
- |
|
(4,761 |
) |
(4,761 |
) |
Currency
translation adjustment |
|
- |
- |
- |
- |
|
- |
(15 |
) |
- |
|
(15 |
) |
Total comprehensive
loss for the period |
|
- |
- |
- |
- |
|
- |
(15 |
) |
(4,761 |
) |
(4,776 |
) |
New share capital
issued from exercise of warrants |
|
1 |
9 |
- |
- |
|
- |
- |
|
- |
|
10 |
|
Share options
exercised |
|
- |
3 |
- |
- |
|
- |
- |
|
- |
|
3 |
|
Share-based payment |
|
- |
- |
277 |
- |
|
- |
- |
|
- |
|
277 |
|
At 30
April 2017 |
|
619 |
46,432 |
5,413 |
(1,943 |
) |
19,993 |
35 |
|
(78,528 |
) |
(7,979 |
) |
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 |
|
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 |
) |
Three months ended 30 April 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 2016 |
|
613 |
46,035 |
3,757 |
(1,943 |
) |
19,993 |
21 |
|
(52,396 |
) |
16,080 |
|
Loss for the
period |
|
- |
- |
- |
- |
|
- |
- |
|
(5,435 |
) |
(5,435 |
) |
Currency
translation adjustment |
|
- |
- |
- |
- |
|
- |
(5 |
) |
- |
|
(5 |
) |
Total comprehensive
loss for the period |
|
- |
- |
- |
- |
|
- |
(5 |
) |
(5,435 |
) |
(5,440 |
) |
New share capital
issued from exercise of warrants |
|
2 |
105 |
- |
- |
|
- |
- |
|
- |
|
107 |
|
Share-based payment |
|
- |
- |
336 |
- |
|
- |
- |
|
- |
|
336 |
|
At 30
April 2016 |
|
615 |
46,140 |
4,093 |
(1,943 |
) |
19,993 |
16 |
|
(57,831 |
) |
11,083 |
|
*See Note 1 – ‘Change in accounting policy’
NOTES TO THE FINANCIAL
STATEMENTSFor the three months ended 30 April 2017
1. Basis of accounting
The unaudited consolidated interim financial
statements of Summit and its subsidiaries (the ‘Group’) for the
three months ended 30 April 2017 have been prepared in accordance
with International Financial Reporting Standards (‘IFRS’) and
International Financial Reporting Interpretations Committee
(‘IFRIC’) interpretations as issued by the International Accounting
Standards Board and as adopted by the European Union and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS including those applicable to accounting periods ending
31 January 2018 and the accounting policies set out in Summit’s
consolidated financial statements. They do not include all the
statements required for full annual financial statements, and
should be read in conjunction with the consolidated financial
statements of the Group as at 31 January 2017 (the ‘2017
Accounts’). The 2017 Accounts, on which the Company’s auditors
delivered an unqualified audit report, will be delivered to the
Registrar of Companies following the 2017 Annual General
Meeting.
The interim financial statements are prepared in
accordance with the historical cost convention. Whilst the
financial information included in this announcement has been
prepared in accordance with IFRSs as issued by the International
Accounting Standards Board and adopted for use in the European
Union, this announcement does not itself contain sufficient
information to comply with IFRSs.
The Group expects it will need to raise
additional funding in the future in order to support research and
development efforts, potential commercialisation related activities
if any of its product candidates receive marketing approval, as
well as to support activities associated with operating as a public
company in both the United States and the United Kingdom.
Management expects to finance its cash needs through a combination
of some, or all, of the following: equity offerings,
collaborations, strategic alliances, grants and clinical trial
support from government entities, philanthropic, non-government and
not for profit organisations and patient advocacy groups, debt
financings, and marketing, distribution or licensing
arrangements.
After review of the future operating costs of
the business in conjunction with the cash held at 30 April 2017 and
the $22 million development milestone now due as detailed in Note
4, ‘Subsequent events,’ management is confident about the Group’s
ability to continue as a going concern and accordingly the interim
financial statements have been prepared on a going concern
basis.
The financial information for the three month
periods ended 30 April 2017 and 2016 are unaudited.
Solely for the convenience of the reader, unless
otherwise indicated, all pound sterling amounts stated in the
Consolidated Balance Sheet as at 30 April 2017, in the Consolidated
Income Statement and in the Consolidated Cash Flow Statement for
the three months ended 30 April 2017 have been translated into US
dollars at the rate on 28 April 2017 of $1.2938 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 14 June 2017.
Change in accounting
policyFollowing an IFRS IC agenda decision in May 2016 on
the application of International Accounting Standard 20 'Government
Grants,' the Company changed its accounting policy regarding
charitable funding arrangements from the Wellcome Trust and US not
for profit organisations during the year ended 31 January 2017.
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 IFRIC decision has clarified that
such arrangements result in a financial liability. The estimate of
the 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 model 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 liability is subsequently measured
at amortised cost using a discounted cash flow model, which
calculates the risk adjusted present values of estimated potential
future cash flows for the respective projects related to the
Wellcome Trust and US not for profit organisations. The financial
liability is 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 model will
be updated for changes in the clinical probability of success and
other associated assumptions with the discount rate remaining
consistent within the model.
Re-measurements of the financial liability are
recognised in the income statement as finance costs. Grant income
is recognised as other operating income in accordance with
International Accounting Standard 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.
This change in accounting policy has been
reflected retrospectively in the comparative financial statements
for the three months ended 30 April 2016. The opening position as
at 1 February 2016 is in line with comparative amounts disclosed in
the financial statements for the year ended 31 January 2017.
The impact of this change in accounting policy
on the unaudited condensed 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.
Impact on Consolidated Statement of Comprehensive
Income |
Original Three months ended 30 April 2016£000 |
|
AdjustedThree months ended 30 April 2016£000 |
|
Impact£000 |
|
|
|
|
|
|
Finance costs |
- |
|
|
(194 |
) |
|
(194 |
) |
|
- |
|
|
(194 |
) |
|
(194 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Impact on Consolidated Statement of Cash
Flows |
Original Three months ended 30 April 2016£000 |
|
AdjustedThree months ended 30 April 2016£000 |
|
Impact£000 |
Loss
before income tax |
(6,176 |
) |
|
(6,370 |
) |
|
(194 |
) |
Adjusted for: |
|
|
|
|
|
Finance costs |
- |
|
|
194 |
|
|
194 |
|
Impact on net cash used in operating activities |
(6,368 |
) |
|
(6,368 |
) |
|
- |
|
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 three months ended 30 April
2017: 61,883,701 (for the three months ended 30 April 2016:
61,324,182).
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 22 February 2017, 50,000 Ordinary Shares were
issued following the exercise of warrants at an exercise price
of 20 pence per share. The issue of shares raised net
proceeds of £10,000.
On 10 April 2017, 16,667 Ordinary Shares were
issued following the exercise of options. The exercise of options
raised net proceeds of £3,000.
Following the exercise of the above warrants and
share options, the number of Ordinary Shares in issue was
61,908,233.
All new Ordinary Shares rank pari passu with
existing Ordinary Shares.
4. Subsequent events
In May 2017, the Group announced the first
dosing of the last patient in its ongoing Phase 2 clinical trial of
ezutromid which triggered a $22 million milestone payment due to
Summit as part of the Group’s licence and collaboration agreement
with Sarepta.
This announcement contains inside information
for the purposes of Article 7 of EU Regulation 596/2014 (MAR).
-END-
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