TIDMSNG
RNS Number : 7726H
Synairgen plc
15 March 2018
Press release
Synairgen plc
('Synairgen' or the 'Company')
Preliminary statement of results for the year ended 31 December
2017
Southampton, UK - 15 March 2018: Synairgen (LSE: SNG), the
respiratory drug discovery and development company, today announces
its preliminary statement of audited results for the year ended 31
December 2017.
Operational highlights - including post period end
-- Successful completion of preclinical pharmacology and
toxicology studies of PXS-5382A, a compound from the anti-fibrotic
LOXL2 inhibitor programme, and initiation of a Phase I clinical
trial
-- Revision of collaboration terms for LOXL2 programme with
Pharmaxis where Synairgen received a GBP5 million upfront payment
and circa 17% of any future partnering proceeds from all fibrotic
indications in return for Pharmaxis taking on full responsibility
for the programme
-- Synairgen regained full control of inhaled interferon beta
programme from AstraZeneca, and conducted further analyses of the
INEXAS trial in asthma leading to a new clinical development plan
for the product in COPD
-- First patients were dosed in the Company's Phase II trial of
inhaled SNG001 in patients with COPD in February
Financial highlights
-- Revenues for the year were GBP5.03 million (2016: GBPnil)
-- Research and development expenditure for the year was GBP2.06
million (2016: GBP2.42 million)
-- Profit from operations for the year ended 31 December 2017
was GBP1.62 million (2016: loss of GBP3.44 million)
-- Cash, cash equivalents and deposit balances of GBP6.85
million at 31 December 2017 (2016: GBP4.77 million). The Group
remains debt free
Commenting on the Annual Results, Simon Shaw, Chairman of
Synairgen said: "Synairgen ended 2017 in a strong position. The
developments with our inhaled interferon beta asset and Pharmaxis
agreement demonstrate Synairgen's commitment to innovative
development programmes and the value we can bring to collaborative
projects. We are well set to pursue interferon beta in COPD and add
to our pipeline in the coming period."
- Ends -
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR")
For further enquiries, please contact:
Synairgen plc
Richard Marsden, Chief Executive Officer
John Ward, Finance Director
Tel: + 44 (0) 23 8051 2800
finnCap
Geoff Nash, James Thompson (Corporate Finance)
Stephen Norcross, Simon Johnson (Corporate Broking)
Tel: + 44 (0) 20 7220 0500
Consilium Strategic Communications (Financial Media and
Investor
Relations)
Mary-Jane Elliott / Sukaina Virji / Laura Thornton
synairgen@consilium-comms.com
Tel: +44 (0) 20 3709 5701
Notes for Editors
About Synairgen
Synairgen is a respiratory drug discovery and development
company founded by University of Southampton Professors Stephen
Holgate, Donna Davies and Ratko Djukanovic. The business, focused
primarily on asthma and COPD, uses its differentiating human
biology BioBank platform and world-renowned international academic
KOL network to discover and develop novel therapies for respiratory
disease. Leveraging its scientific and clinical facilities at
Southampton General Hospital, the Company uses in vitro and ex vivo
models to progress opportunities into clinical development. The
BioBank of human samples is used in these models to increase
confidence in the likelihood of successful drug development. Core
to Synairgen's business strategy is the realisation of value via
licensing transactions. In August 2015 the Company entered into a
collaboration with Pharmaxis to develop an oral LOXL2 inhibitor to
reduce fibrosis in patients with idiopathic pulmonary fibrosis
(IPF). In December 2017 the collaboration agreement was amended as
Pharmaxis took on full responsibility for the programme, with
Synairgen receiving a GBP5 million upfront payment and circa 17% of
any future partnering proceeds from all fibrotic indications.
Synairgen is quoted on AIM (LSE: SNG). For more information about
Synairgen, please see www.synairgen.com
Chairman's and Chief Executive Officer's Review
Operating Review
Summary
We closed 2017 in a strong position, having met a number of
challenges during the year. AstraZeneca returned rights to the
inhaled interferon beta (IFN-<BETA>) asset, enabling
Synairgen to progress the programme for COPD, where there is
significant unmet medical need. We also made good progress with
Pharmaxis, successfully taking a LOXL2 inhibitor through
preclinical activities into a Phase I clinical trial. In response
to considerable interest in the role of LOXL2 as a molecular target
in non-lung indications, we updated the collaboration agreement
with Pharmaxis assuming all future development, licensing and
financing responsibilities. Synairgen received GBP5m and a 17%
interest in any future licence income received by Pharmaxis across
all potential fibrotic indications.
Inhaled interferon beta programme
Clinical need and identification of high risk patients
Respiratory viruses (e.g. those responsible for common cold and
flu infections) do not often cause serious illness in healthy
people. In contrast, in patients with asthma and COPD these
infections are much more likely to spread to the lungs, worsening
pre-existing lung inflammation, and exacerbating disease symptoms.
There is a great need for an antiviral therapy that can be
delivered directly to the lungs when patients are at risk from
these common respiratory viruses.
Inhaled IFN-<BETA> to boost the lungs' antiviral
defences
IFN-<BETA> is a natural protein made by lung cells when a
virus is detected. IFN-<BETA> 'orchestrates' many antiviral
pathways. In vitro experiments have shown IFN-<BETA>
production to be deficient or insufficient in asthma and COPD
patients' lung cells, compared with cells from healthy individuals
when infected by respiratory viruses. This makes these patient
groups more susceptible to infection. Synairgen has progressed
inhaled IFN-<BETA> into clinical trials as a drug to be given
at the time of respiratory virus infection to boost the lung's
defences.
Asthma or COPD
Both asthma and COPD patients suffer from exacerbations (acute
worsening of disease) of their disease. These exacerbations are
strongly linked to common viral infections. COPD patients can also
exacerbate due to bacterial lung infections and other environmental
factors. Up until recently, the difficulty of excluding bacterial
infections in COPD led us to advancing inhaled IFN-<BETA> for
asthma over COPD, even though the health economic impact of viral
infections is much greater for COPD.
Asthma
Inhaled IFN-<BETA> has boosted markers of antiviral
defence in the lungs in three clinical trials in asthma, confirming
successful delivery to the target organ and demonstrating proof of
activation of the mechanism. In all clinical trials completed so
far, inhaled IFN-<BETA> has been well tolerated. In the two
Phase II clinical trials that have been conducted in asthma (SG005
by Synairgen and INEXAS by AstraZeneca) the drug has significantly
accelerated a recovery in lung function in patients who have been
infected with a respiratory virus. In both trials, a subset of more
difficult to treat patients had better asthma control during viral
infection. However, the rate of exacerbation (defined as requiring
oral steroids or hospitalisation) was too low (less than 10%) to
determine whether the drug was providing benefit. This rate of
exacerbation was similar to in a 2017 trial conducted by Aviragen
where the rate was found to be approximately 7%(1) . Thus
exacerbations, when they do occur in asthma, are strongly linked to
viral cold infections (up to 80% being caused by colds(2) ),
however the chance that a patient is going to exacerbate when they
get their next cold was deemed likely to be too low to support an
attractive pricing point for the drug, making progression in asthma
challenging. AstraZeneca returned the asset to Synairgen for
'strategic reasons'.
The move towards COPD
In all trials undertaken to date in asthma, the biomarker
responses and the clinical effect were encouraging, particularly
the positive improvements in lung function. The issue was that the
asthma population, whilst easier to characterise for trial
enrolment purposes, did not see a sufficient number of
exacerbations to properly measure the impact of drug. Synairgen has
long identified COPD as a disease where virally-driven
exacerbations are recognised to be a significant health economic
burden. COPD is the second most common cause of unplanned
hospitalisation after cardiovascular disease(3) , and it is no
coincidence that most of these exacerbations occur in the winter
months.
Hitherto, the challenge in COPD was to identify patients, who
were infected with a virus rather than bacteria or other causes of
exacerbation. The upshot of this was that the trial size required
in order to have sufficient evidence of the drug's effect would
have resulted in an excessively long duration, high cost and would
still have run the risk of significant numbers of non-virally
infected patients being treated, thereby potentially diluting the
results of the trial.
Substantial progress was made on both of these elements in
2017:
-- First, two papers were published which clarify the
interaction of viruses with COPD. One paper shows that, when
looking at all colds in the study period, the risk that a cold will
cause an exacerbation of COPD is around 50%(4) , much greater than
the <10% figure in asthma. The second paper(5) shows that there
is a strong interaction between seasonal viruses and bacteria which
permanently colonise the COPD patients' lungs, greatly increasing
the chance that a patient will exacerbate. These papers both
establish, what most hospitals know through experience, that COPD
sufferers are significantly more likely to have severe
virus-induced exacerbations than asthmatics.
-- Second, a new point of care diagnostic test has been launched
in 2017 which enables the confirmation of the presence of a
respiratory virus in less than 60 minutes. This test will be used
in clinical trials to confirm the presence of the virus. This makes
clinical trials in COPD feasible as we can exclude patients who
present to healthcare providers with only bacterial or
environmental drivers of their condition. It also makes the trials
more efficient and less costly to run; in the two asthma trials we
were able to confirm the presence of a virus in 63% of patients in
SG005, and 48% of patients in the INEXAS trial. In the recently
started COPD trial, 100% of patients in the efficacy analysis will
have a confirmed viral infection prior to initiation of treatment.
This will allow the drug to show its activity against the target
viral infections without the dilutive effect of trial subjects who
are exacerbating for some other reason (bacterial or
environmental).
COPD development
We are progressing inhaled IFN-<BETA> in COPD. Starting
with a two-part Phase II clinical trial (commenced February 2018),
we are assessing patient safety in 10 COPD patients without viral
infections in Part 1 (anticipated to complete in Q2 2018), prior to
assessing efficacy parameters in 80 COPD patients with confirmed
virus in Part 2, who will be dosed for 14 days. All of the patients
in Part 2 will be tested for the presence of virus prior to dosing.
This trial, which is anticipated to finish during the 2018/19
winter season, is designed to pave the way for a pivotal Phase IIb
clinical trial. Preparatory work for the Phase IIb clinical trial
will commence in 2018.
LOXL2 collaboration with Pharmaxis
LOXL2 in fibrosis
LOXL2 is an enzyme which 'knits together' collagen fibres,
increasing the rigidity of tissue as a component of the fibrosis
pathology. LOXL2 is implicated in major fibrotic diseases such as
the liver disease NASH (Non-alcoholic Steatohepatitis), heart
fibrosis, kidney fibrosis and, the lung disease idiopathic
pulmonary fibrosis (IPF).
Collaboration with Pharmaxis
In the collaboration with Pharmaxis, Synairgen assisted in the
development and selection of compounds for progression, and used
our BioBank and in vitro model platform to generate compelling data
to support the development of compounds for IPF. This included
generating data from a fibroblastic focus model (developed in
collaboration with the University of Southampton) using cells from
IPF patients, in which we showed that treatment with LOXL2
inhibitors had the potential to reduce lung tissue stiffness. Lung
tissue stiffness is a key factor in IPF as it makes it increasingly
difficult for a patient to breathe.
Synairgen completed the pre-clinical package for PXS-5382 and
commenced a Phase I clinical trial in Q4 2017.
Large pharma interest in non-IPF indications and renegotiation
of collaboration agreement
During the year, it became evident that potential large pharma
partners were very interested in the collaboration's compounds.
However, that interest was not solely in IPF but included
significant other non-respiratory indications, particularly NASH.
Pharmaxis generated persuasive data in preclinical models showing
that the inhibitors could reduce liver fibrosis and improve liver
function. It became increasingly important that we reconfigure the
collaboration with Pharmaxis to allow the lifting of certain
constraints in the collaboration agreement to allow Pharmaxis to
pursue a multi-compound multi-indication deal. In December 2017 we
permanently passed full development, financial and licensing
responsibilities to Pharmaxis in return for GBP5m and a retained
interest in the programme of 17% of the fibrotic indication
licensing revenue received by Pharmaxis. In its half yearly report
for the six months ended 31 December 2017 dated 15 February 2018,
Pharmaxis stated that it plans to partner the LOXL2 program in the
second half of 2018 following Phase I trial readout. For more
information on the development and licensing of the LOXL2
inhibitors visit www.pharmaxis.com.
New opportunities
The LOXL2 programme is an example of the type of collaboration
we seek. It is a demonstration of the value of our approach and
technology. In this collaboration we contributed expertise and used
our human biology based approach which utilised our BioBank-based
in vitro model platform and the strong ties we have with the
University of Southampton to add value in a collaboration. We are
actively assessing new opportunities with similar potential.
Financial Review
Statement of Comprehensive Income
The profit from operations for the year ended 31 December 2017
was GBP1.62 million (2016: loss GBP3.44 million). Revenues of
GBP5.03 million (2016: GBPnil) comprised the GBP5 million payable
by Pharmaxis as consideration for the change in terms (as discussed
above) and the balance of revenues are attributable to materials
provided to AstraZeneca. Research and development expenditure for
the year amounted to GBP2.06 million (2016: GBP2.42 million), and
was focussed primarily on two programmes, namely the LOXL2
programme and preparation for the interferon beta Phase II clinical
trial in COPD.
Other administrative costs for the year amounted to GBP1.35
million (2016: GBP1.02 million), with the increase being
attributable to higher staff costs on account of bonuses. As the
Group was in profit, there was a reduction in the research and
development tax credit from GBP0.59 million to GBP0.13 million. The
profit after tax for 2017 was GBP1.76 million (2016: loss of
GBP2.82 million) and the basic earnings per share amounted to 1.93p
(2016: basic loss per share of 3.08p).
Statement of Financial Position and cash flows
At 31 December 2017, net assets amounted to GBP6.56 million
(2016: GBP4.69 million), including net funds of GBP6.85 million
(2016: GBP4.77 million).
The principal elements of the GBP2.08 million increase over the
year ended 31 December 2017 (2016: GBP2.94 million decrease) in net
funds were:
-- Cash generation from operations of GBP1.45 million (2016:
GBP3.32 million used in operations); and
-- Research and development tax credits received of GBP0.62 million (2016: GBP0.33 million).
The increase in trade and other receivables (2017: GBP0.63
million, 2016: GBP0.09 million) is attributable to amounts billed
or billable to Pharmaxis at 31 December 2017 as a result of the
transaction referred to above. The increase in trade and other
payables (2017: GBP1.10m, 2016: GBP0.86m) is attributable to the
bonus accrual at 31 December 2017 (2016: GBPnil).
Outlook
We closed the financial year in a strong position. We have full
possession of the inhaled IFN-<BETA> programme which is being
progressed to prevent or attenuate exacerbations of COPD caused by
respiratory viruses and remain very excited by this asset. We also
have a lasting interest in the potentially high value LOXL2
programme being progressed by Pharmaxis. In addition, we have a
number of potentially attractive new programmes under review which
gives us confidence in further development of our collaborative
pipeline in the coming periods.
References
1. Aviragen Therapeutics presentation Directing Next Generation Direct-Acting Antivirals May 2017
2. J.T. Kelly et al. Host immune responses to rhinovirus:
Mechanisms in asthma. J Allergy Clin Immunol 2008; 122: 671-682
3. Department of Health. An Outcomes Strategy for Chronic
Obstructive Pulmonary Disease (COPD and Asthma in England.
Published July 2011.
4. Johnston NW, et al. Colds as predictors of the onset and
severity of COPD exacerbations International Journal of COPD
2017:12: 839-848
5. Wilkinson TMA, et al. A prospective, observational cohort
study of the seasonal dynamics of airway pathogens in the aetiology
of exacerbations in COPD Thorax 2017;0:1-9.
Doi:10.1136/thoraxjnl=2016-209023
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
Year Year
ended ended
31 December 31 December
2017 2016
Notes GBP000 GBP000
Revenue 5,025 -
Research and development
expenditure (2,061) (2,418)
Other administrative expenses (1,349) (1,024)
------------------------------- ------ --------------------- -------------------
Total administrative expenses (3,410) (3,442)
Profit/(Loss) from operations 1,615 (3,442)
Finance income 14 38
Profit/(Loss) before tax 1,629 (3,404)
Tax 2 132 587
Profit/(Loss) and total
comprehensive income/(loss)
for the period attributable
to equity holders of the
parent 1,761 (2,817)
===================== ===================
Earnings/(Loss) per ordinary
share 3
Basic earnings/(loss) per
share (pence) 1.93p (3.08p)
Diluted earnings/(loss)
per share (pence) 1.87p (3.08p)
Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
Share Share Merger Retained
capital premium reserve deficit Total
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2016 913 25,771 483 (19,820) 7,347
Issuance of ordinary
shares 1 - - - 1
Recognition of share-based
payments - - - 154 154
Loss and total comprehensive
loss for the year - - - (2,817) (2,817)
-------- ------------ -------- -------- -----------
At 31 December 2016 914 25,771 483 (22,483) 4,685
Recognition of share-based
payments - - - 113 113
Profit and total comprehensive
income for the year - - - 1,761 1,761
-------- ------------ -------- -------- -----------
At 31 December 2017 914 25,771 483 (20,609) 6,559
======== ============ ======== ======== ===========
Consolidated Statement of Financial Position
as at 31 December 2017
31 December 31 December
2017 2016
GBP000 GBP000
Assets
Non-current assets
Intangible assets 45 62
Property, plant and equipment 12 13
------------ ------------
57 75
------------ ------------
Current assets
Inventories 56 55
Current tax receivable 71 560
Trade and other receivables 633 90
Other financial assets
- bank deposits 2,000 1,661
Cash and cash equivalents 4,845 3,104
------------ ------------
7,605 5,470
Total assets 7,662 5,545
------------ ------------
Liabilities
Current liabilities
Trade and other payables (1,103) (860)
------------ ------------
Total liabilities (1,103) (860)
------------ ------------
Total net assets 6,559 4,685
============ ============
Equity
Capital and reserves attributable
to equity holders of the
parent
Share capital 914 914
Share premium 25,771 25,771
Merger reserve 483 483
Retained deficit (20,609) (22,483)
------------ ------------
Total equity 6,559 4,685
============ ============
Consolidated Statement of Cash Flows
for the year ended 31 December 2017
Year Year
ended ended
31 31
December December
2017 2016
GBP000 GBP000
Cash flows from operating activities
Profit/(Loss) before tax 1,629 (3,404)
Adjustments for:
Finance income (14) (38)
Depreciation 7 9
Amortisation 17 19
Share-based payment charge 113 154
--------- ---------
Cash flows from operations before
changes in working capital 1,752 (3,260)
(Increase)/Decrease in inventories (1) 1
(Increase)/Decrease in trade
and other receivables (548) 17
Increase/(Decrease) in trade
and other payables 243 (76)
--------- ---------
Cash generated from/(used in)
operations 1,446 (3,318)
Tax credit received 621 330
--------- ---------
Net cash generated from/(used
in) operating activities 2,067 (2,988)
--------- ---------
Cash flows from investing activities
Interest received 19 43
Purchase of property, plant
and equipment (6) (5)
(Increase)/Decrease in other
financial assets (339) 2,061
--------- ---------
Net cash (used in)/generated
from investing activities (326) 2,099
--------- ---------
Cash flows from financing activities
Proceeds from issuance of ordinary
shares - 1
Net cash generated from financing
activities - 1
--------- ---------
Increase/(Decrease) in cash
and cash equivalents 1,741 (888)
Cash and cash equivalents at
beginning of the year 3,104 3,992
--------- ---------
Cash and cash equivalents at
end of the year 4,845 3,104
========= =========
Notes
1. Basis of preparation
The financial information of the Group set out above does not
constitute "statutory accounts" for the purposes of Section 435 of
the Companies Act 2006. The financial information for the year
ended 31 December 2017 has been extracted from the Group's audited
financial statements which were approved by the Board of directors
on 14 March 2018 and will be delivered to the Registrar of
Companies for England and Wales in due course. The financial
information for the year ended 31 December 2016 has been extracted
from the Group's audited financial statements for that period which
have been delivered to the Registrar of Companies for England and
Wales. The reports of the auditors on both these financial
statements were unqualified, did not include any references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under Section 498(2) or Section 498(3) of the Companies Act 2006.
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards ('IFRSs') as adopted by the European Union, this
announcement does not itself contain sufficient information to
comply with those IFRSs. This financial information has been
prepared in accordance with the accounting policies set out in the
December 2017 report and financial statements.
2. Tax
The tax credit of GBP132,000 (2016: GBP587,000) relates to
research and development tax credits in respect of the year ended
31 December 2017 (GBP71,000) and an adjustment in respect of prior
periods (GBP61,000).
3. Earnings/(Loss) per ordinary share
Basic earnings/(loss) per share ('EPS' or 'LPS') is calculated
by dividing the profit/(loss) attributable to ordinary equity
holders of the parent company by the weighted average number of
ordinary shares in issue during the year.
For diluted earnings per share, the weighted number of ordinary
shares in issue is adjusted to assume conversion of dilutive
potential ordinary shares, being share options where the exercise
price is less than the average market price of the Company's
ordinary shares during the year and where performance conditions
have been met or, in the case of options where the performance
period is not completed, are being met.
Where there is a loss (as for the year ended 31 December 2016),
the loss attributable to ordinary shareholders and weighted average
number of ordinary shares for the purpose of calculating the
diluted earnings per ordinary share are identical to those used for
basic loss per share. This is because the exercise of share options
would have the effect of reducing the loss per ordinary share and
is therefore antidilutive under the terms of IAS 33.
The earnings/losses and number weighted average number of shares
used in the calculations are as follows:
2017 2016
Earnings Shares EPS Losses Shares LPS
GBP000 000 pence GBP000 000 Pence
Basic earnings/(loss)
per share 1,761 91,363 1.93 (2,817) 91,351 (3.08)
Effect of additional
shares under
option - 2,873 (0.06) - - -
--------- ------- ------- --------- ------- -------
Diluted earnings/(loss)
per share 1,761 94,236 1.87 (2,817) 91,351 (3.08)
--------- ------- ------- --------- ------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFDLFSXPEAF
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