TIDMSUMM
Summit Therapeutics plc
('Summit', the 'Company' or the 'Group')
Summit Therapeutics Reports Financial Results and Operational Progress
for the Third Quarter and Nine Months Ended 31 October 2019
Oxford, UK, and Cambridge, MA, US, 17 December 2019 - Summit
Therapeutics plc (NASDAQ: SMMT, AIM: SUMM) today reports its financial
results and provides an update on its operational progress for the third
quarter and nine months ended 31 October 2019.
"Our enthusiasm for ridinilazole continues to grow. Phase 2 clinical
data presented this past quarter showed ridinilazole had significant
improvements in patient quality of life measures and preservation of the
gut microbiome compared to the current standard of care. These findings
reinforce our belief that ridinilazole could provide better overall
clinical, physical and mental outcomes for patients with C. difficile
infection," said Glyn Edwards, Chief Executive Officer of Summit. "We
were also pleased to announce recently the proposed $50 million
investment into Summit that will primarily be used to support the
ongoing Phase 3 clinical programme and commercial preparatory activities
for ridinilazole. We look forward to continuing to advance ridinilazole
through our landmark Phase 3 clinical trials that remain on track to
report results in the second half of 2021."
Ridinilazole for C. difficile Infection ('CDI')
-- Ri-CoDIFy Phase 3 landmark clinical trials aim to support registration of
the precision antibiotic ridinilazole in the US and other territories,
and its adoption as a first-line treatment for CDI by:
1. showing superiority over the current standard of care, vancomycin, using
a composite endpoint measuring sustained clinical response;
2. generating health economic data to help support ridinilazole's commercial
launch, if approved; and
3. undertaking deep microbiome analyses to evaluate ridinilazole's
preservation of the gut microbiome.
-- The Phase 3 clinical programme remains on track for expected reporting of
top-line data in the second half of 2021. The trials had enrolled a total
of 128 patients as at the end of November 2019 with over two thirds of
the 300 planned clinical trials sites having been opened.
-- Reported new Phase 2 clinical trial data that showed ridinilazole
improved patients' quality of life compared to vancomycin, including
statistically significant improvements in measurements of physical and
mental health. Additional data from the Phase 2 clinical trial provided
mechanistic insights into how ridinilazole preserved the diversity of the
gut microbiome in patients with CDI to maintain the balance of the
metabolome of active chemicals made or modified by gut bacteria that help
prevent C. difficile recurrence. These new results were reported at the
ID Week Conference held in Washington DC in October 2019.
-- Commercial and medical affairs hires have been made in the United States
to support work to prepare for a potential launch and to secure future
market access for ridinilazole, if approved.
Discuva Platform
Enterobacteriaceae
-- DDS-04 compound series is a new class of antibiotics in lead optimisation
that acts via the novel bacterial target LolCDE with the potential to
treat infections caused by the Gram-negative bacteria,
Enterobacteriaceae.
-- In vivo proof of concept has been demonstrated with a DDS-04 series
compound in pneumonia, sepsis and urinary tract infection ('UTI'). Data
from all three disease models were presented at the ASM / ESCMID
Conference held in September.
Gonorrhoea
-- The focus of the gonorrhoea programme has shifted from SMT-571 to related
compounds as part of ongoing preclinical studies as the Company seeks to
bring an optimal clinical candidate forward. The lead optimisation work
is being supported by an award of up to $4.5 million from CARB-X.
Corporate Highlights
-- A proposed fundraising of approximately $50 million through a
subscription and placing of new ordinary shares and warrants to existing
investors (the 'Fundraising') was announced on 6 December 2019. The
Fundraising requires approval by shareholders at a general meeting of the
Company to be held on 23 December 2019. If the Fundraising is completed,
the net proceeds, together with the Company's existing cash resources and
funding agreements, are expected to extend its cash runway to 31 January
2021.
-- Conditional on the Fundraising being completed, the board of directors
will be restructured to support preparations for the potential commercial
launch of ridinilazole for the treatment of CDI. Specifically,
conditional on the Fundraising being completed, Mr Robert W. Duggan, Mr
Manmeet Soni, Dr Elaine Stracker and Dr Ventzislav Stefanov were
appointed as non-executive directors, and Dr Frank Armstrong, Mr Leopoldo
Zambeletti and Mr David Wurzer are stepping down from the board of
directors. Mr Glyn Edwards will take the role of Chairman in addition to
his existing role as Chief Executive Officer.
-- As a condition of the Fundraising, it is proposed that the admission of
the Company's ordinary shares to trading on AIM will be cancelled ('AIM
Delisting') with effect from 7.00 am on 24 February 2020. The Company's
American Depositary Shares ('ADSs') will remain listed on the Nasdaq
Stock Market where one ADS is represented by five ordinary shares. The
proposed AIM Delisting reflects the increasing focus of Summit's business
operations on the United States, and specifically the Company's plans to
commercialise ridinilazole in the United States with its own specialised
sales force, if approved.
Financial Highlights
-- Cash and cash equivalents at 31 October 2019 of GBP13.6 million compared
to GBP26.9 million at 31 January 2019. Cash position does not include the
proposed Fundraising of approximately $50 million announced on 6 December
2019 (see Corporate Highlights above for further details).
-- Loss for the three months ended 31 October 2019 of GBP7.0 million
compared to a loss of GBP8.1 million for the three months ended
31 October 2018.
-- The Company today announces that it has changed its accounting reference
date from 31 January to 31 December with immediate effect.
This announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014 (MAR).
About Summit Therapeutics
Summit Therapeutics is a leader in antibiotic innovation. Our new
mechanism antibiotics are designed to become the new standards of care
for the benefit of patients and create value for payors and healthcare
providers. We are currently developing new mechanism antibiotics to
treat infections caused by C. difficile, N. gonorrhoeae and
Enterobacteriaceae and are using our proprietary Discuva Platform to
expand our pipeline. For more information, visit www.summitplc.com and
follow us on Twitter @summitplc.
For more information:
Summit
Glyn Edwards / Richard Pye (UK office) Tel: +44 (0)1235 443 951
Michelle Avery (US office) +1 617 225 4455
Cairn Financial Advisers LLP (Nominated Tel: +44 (0)20 7213 0880
Adviser)
Liam Murray / Tony Rawlinson / Ludovico
Lazzaretti
N+1 Singer (Joint Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / George Tzimas, Corporate
Finance
Tom Salvesen, Corporate Broking
Bryan Garnier & Co Limited (Joint Broker) Tel: +44 (0)20 7332 2500
Phil Walker / Dominic Wilson
MSL Group (US) Tel: +1 781 684 6552
Erin Anthoine summit@mslgroup.com
---------------------------
Consilium Strategic Communications (UK) Tel: +44 (0)20 3709 5700
Mary-Jane Elliott / Sue Stuart / summit@consilium-comms.com
Sukaina Virji / Lindsey Neville
---------------------------
Forward Looking Statements
Any statements in this press release about the Company's future
expectations, plans and prospects, including but not limited to, whether
or not the Company will consummate the Fundraising, the restructuring of
the board of directors, the AIM Delisting, the trading markets for the
Company's ordinary shares and ADSs, statements about the potential
benefits and future operation of the BARDA or CARB-X contract, including
any potential future payments thereunder, the clinical and preclinical
development of the Company's product candidates, the therapeutic
potential of the Company's product candidates, the potential of the
Discuva Platform, the potential commercialisation of the Company's
product candidates, the sufficiency of the Company's cash resources, the
timing of initiation, completion and availability of data from clinical
trials, the potential submission of applications for marketing approvals
and other statements containing the words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "project," "should," "target," "would," and
similar expressions, constitute forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those indicated by such
forward-looking statements as a result of various important factors,
including: the risk that the Company's shareholders do not approve the
Fundraising and AIM Delisting, the risk that other closing conditions to
the Fundraising are not satisfied, the ability of BARDA or CARB-X to
terminate the Company's contract for convenience at any time, the
uncertainties inherent in the initiation of future clinical trials,
availability and timing of data from ongoing and future preclinical
studies and clinical trials and the results of such preclinical studies
and clinical trials, whether preliminary results from a clinical trial
will be predictive of the final results of that trial or whether results
of early clinical trials or preclinical studies will be indicative of
the results of later clinical trials, expectations for regulatory
approvals, laws and regulations affecting government contracts,
availability of funding sufficient for the Company's foreseeable and
unforeseeable operating expenses and capital expenditure requirements
and other factors discussed in the "Risk Factors" section of filings
that the Company makes with the Securities and Exchange Commission,
including the Company's Annual Report on Form 20-F for the fiscal year
ended 31 January 2019. Accordingly, readers should not place undue
reliance on forward-looking statements or information. In addition, any
forward-looking statements included in this press release represent the
Company's views only as of the date of this release and should not be
relied upon as representing the Company's views as of any subsequent
date. The Company specifically disclaims any obligation to update any
forward-looking statements included in this press release.
FINANCIAL REVIEW
Other Operating Income
Other operating income was GBP3.8 million for the three months ended 31
October 2019, as compared to GBP2.8 million for the three months ended
31 October 2018. Other operating income was GBP12.8 million for the nine
months ended 31 October 2019, as compared to GBP9.0 million for the nine
months ended 31 October 2018. These increases resulted primarily from
the recognition of operating income from Summit's funding contract with
BARDA for the development of ridinilazole, which was GBP3.6 million for
the three months ended 31 October 2019 as compared to GBP2.2 million for
the three months ended 31 October 2018 and GBP11.7 million for the nine
months ended 31 October 2019 as compared to GBP7.5 million for the nine
months ended 31 October 2018. As of 31 October 2019, an aggregate of
GBP26.6 million ($34.3 million) of the total committed BARDA funding of
$53.6 million has been recognised.
The Group also recognised operating income related to the CARB-X award
supporting the development of the Company's gonorrhoea programme of
GBP0.2 million during the three months ended 31 October 2019 as compared
to GBP0.1 million for the three months ended 31 October 2018 and GBP0.6
million during the nine months ended 31 October 2019 as compared to
GBP0.3 million for the nine months ended 31 October 2018.
Revenue
Revenue was GBP0.1 million for the three months ended 31 October 2019
compared to GBP0.7 million for the three months ended 31 October 2018.
Revenue was GBP0.5 million for the nine months ended 31 October 2019
compared to GBP42.5 million for the nine months ended 31 October 2018.
Revenue of GBP0.1 million recognised during the three months ended 31
October 2019 and GBP0.4 million recognised during the nine months ended
31 October 2019 related to the receipt of a $2.5 million (GBP1.9
million) upfront payment in respect of the licence and commercialisation
agreement signed with Eurofarma Laboratórios SA in December 2017
for the exclusive right to commercialise ridinilazole in specified Latin
American and Caribbean countries.
The decreases in revenue recognised are principally due to the reduction
in revenue related to the Sarepta licence and collaboration agreement
for the treatment of Duchenne muscular dystrophy ('DMD'). Revenue
relating to the cost-share arrangement under the Sarepta agreement
recognised during the three months ended 31 October 2019 amounted to
GBPnil and during the nine months ended 31 October 2019 amounted to
GBP0.1 million, as compared to total revenues relating to the upfront
payment, development milestone payment and cost-share arrangement
recognised during the three months ended 31 October 2018 of GBP0.6
million and during the nine months ended 31 October 2018 of GBP41.9
million. The agreement with Sarepta was terminated, effective August
2019, with no material ongoing obligations for either party.
Operating Expenses
Research and Development Expenses
Research and development expenses decreased by GBP1.0 million to GBP7.2
million for the three months ended 31 October 2019 from GBP8.2 million
for the three months ended 31 October 2018. Research and development
expenses decreased by GBP4.9 million to GBP24.7 million for the nine
months ended 31 October 2019 from GBP29.6 million for the nine months
ended 31 October 2018. These decreases primarily reflect decreases in
clinical programme costs pertaining to the historical DMD programme.
Expenses related to the CDI programme increased by GBP4.2 million to
GBP16.9 million for the nine months ended 31 October 2019 from GBP12.7
million for the nine months ended 31 October 2018. This increase
primarily related to clinical operations and supply manufacturing
activities related to the ongoing Ri-CoDIFy Phase 3 clinical trials of
ridinilazole that commenced in February 2019.
Investment in the Group's preclinical antibiotic pipeline was GBP2.0
million for the nine months ended 31 October 2019 compared to GBP1.1
million for the nine months ended 31 October 2018. This increase
primarily related to preclinical development activities for DDS-04
series for the treatment of Enterobacteriaceae infections and the
gonorrhoea programme.
Expenses related to the DMD programme decreased to GBP0.2 million for
the nine months ended 31 October 2019 from GBP8.6 million for the nine
months ended 31 October 2018. The Group does not expect to incur further
significant costs for this programme.
Other research and development expenses decreased by GBP1.7 million to
GBP5.6 million during the nine months ended 31 October 2019 as compared
to GBP7.3 million during the nine months ended 31 October 2018, which
was driven by a decrease in staffing and facility costs.
General and Administration Expenses
General and administration expenses decreased by GBP0.3 million to
GBP4.4 million for the three months ended 31 October 2019 from GBP4.7
million for the three months ended 31 October 2018. General and
administration expenses decreased by GBP2.1 million to GBP7.2 million
for the nine months ended 31 October 2019 from GBP9.3 million for the
nine months ended 31 October 2018. These decreases were driven primarily
by the non-cash charge for the acceleration of share-based payment
expense resulting from the surrender of share options offset by a net
positive movement in exchange rate variances accounted for in the
comparative periods.
Finance Costs
Finance costs recognised during the three and nine months ended 31
October 2019 relate to lease liability interest payable and the
unwinding of the discount associated with provisions. Finance costs were
GBP0.1 million for the three months ended 31 October 2019 compared to
GBP0.1 million for the three months ended 31 October 2018. Finance costs
were GBP0.2 million for the nine months ended 31 October 2019 compared
to GBP0.4 million for the nine months ended 31 October 2018. This
decrease relates to the cessation of the unwinding of the discount
following the remeasurement in June 2018 of the financial liabilities on
funding arrangements for the historical DMD programme.
Taxation
The income tax credit for the three months ended 31 October 2019 was
GBP0.7 million as compared to GBP1.3 million for the three months ended
31 October 2018. The income tax credit for the nine months ended 31
October 2019 was GBP2.6 million as compared to GBP1.7 million for the
nine months ended 31 October 2018. The Group's current net tax credit
for the periods reflects the accrued UK research and development tax
credit based on management's estimate of the qualifying expenditure
relating to research and development activities carried out by the Group,
the taxes relating to the US operations and the release of deferred tax
liabilities associated with the amortisation of intangible assets.
Losses
Loss before income tax was GBP7.8 million for the three months ended 31
October 2019 compared to a loss before income tax of GBP9.4 million for
the three months ended 31 October 2018. Loss before income tax was
GBP18.8 million for the nine months ended 31 October 2019 compared to a
profit before income tax of GBP10.9 million for the nine months ended 31
October 2018.
Net loss for the three months ended 31 October 2019 was GBP7.0 million
with a basic loss per share of 4 pence compared to a net loss of GBP8.1
million for the three months ended 31 October 2018 with a basic loss per
share of 10 pence. Net loss for the nine months ended 31 October 2019
was GBP16.2 million with a basic loss per share of 10 pence compared to
a net profit of GBP12.7 million for the nine months ended 31 October
2018 with a basic earnings per share of 16 pence.
The profits recorded during the nine months ended 31 October 2018 were
due to the recognition of all remaining deferred revenue related to the
Sarepta agreement.
Cash Flows
The Group had a net cash outflow of GBP13.7 million for the nine months
ended 31 October 2019 as compared to a net cash outflow of GBP8.2
million for the nine months ended 31 October 2018.
Operating Activities
For the nine months ended 31 October 2019, net cash used in operating
activities was GBP13.2 million compared to GBP22.1 million for the nine
months ended 31 October 2018. This positive movement of GBP8.9 million
was driven by an increase in cash received from licensing agreements and
funding arrangements of GBP0.8 million, an increase in taxation cash
inflows of GBP5.4 million due to the timing of receipt of the Group's
research and development tax credits receivable on qualifying
expenditure in respect of financial years ended 31 January 2017, 2018
and 2019, and a decrease in operating costs of GBP10.2 million as a
result of the Group's decision to discontinue development of ezutromid.
Investing Activities
Net cash used in investing activities was GBP0.2 million for the nine
months ended 31 October 2019 as compared to GBP0.1 million for the nine
months ended 31 October 2018. Net cash used in investing activities for
the nine months ended 31 October 2019 includes amounts paid to acquire
property, plant and equipment and intangible assets, offset by bank
interest received on cash deposits.
Financing Activities
Net cash used in financing activities for the nine months ended 31
October 2019 of GBP0.3 million primarily relates to lease liability
repayments. Net cash generated from financing activities for the nine
months ended 31 October 2018 of GBP14.0 million was primarily driven by
GBP14.1 million of proceeds, net of transaction costs, received
following the Group's equity placing in March 2018.
Financial Position and Cash Runway Guidance
As at 31 October 2019, total cash and cash equivalents held were GBP13.6
million (31 January 2019: GBP26.9 million).
On 6 December 2019, the Group announced a proposed Fundraising of
approximately $50 million which is subject to certain shareholder
approvals being obtained at a general meeting to be held on 23 December
2019. Please see Note 1 for further details should the Group not receive
shareholder approval. If shareholder approval is obtained, the net
proceeds of the Fundraising, together with the Group's existing cash
resources and funding agreements, are expected to extend its cash runway
to 31 January 2021.
Glyn Edwards
Chief Executive Officer
17 December 2019
FINANCIAL STATEMENTS
Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the three months ended 31 October 2019
Three months Three months Three months
ended ended ended
31 October 31 October 31 October
2019 2019 2018
(Adjusted*)
Note $000s GBP000s GBP000s
Revenue 160 124 675
Other operating income 4,881 3,772 2,825
Operating expenses
Research and development (9,347) (7,224) (8,195)
General and administration (5,650) (4,367) (4,654)
Total operating expenses (14,997) (11,591) (12,849)
--------------------------------------------------- --------- --------- ---------
Operating (loss) (9,956) (7,695) (9,349)
Finance income 1 1 --
Finance costs (82) (63) (60)
(Loss) before income tax (10,037) (7,757) (9,409)
Income tax 941 727 1,275
(Loss) for the period (9,096) (7,030) (8,134)
Other comprehensive (loss) / income
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations (21) (16) 6
Total comprehensive (loss) for the
period (9,117) (7,046) (8,128)
Basic and diluted (loss) per ordinary 2 (5) cents (4) pence (10) pence
share from operations
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the nine months ended 31 October 2019
Nine months Nine months Nine months
ended ended ended
31 October 31 October 31 October
2019 2019 2018
(Adjusted*)
Note $000s GBP000s GBP000s
Revenue 646 499 42,507
Other operating income 16,533 12,778 8,979
Operating expenses
Research and development (31,976) (24,713) (29,640)
General and administration (9,350) (7,226) (9,309)
Impairment of goodwill and intangible
assets -- -- (3,986)
Total operating expenses (41,326) (31,939) (42,935)
---------------------------------------------------
Operating (loss) / profit (24,147) (18,662) 8,551
Finance income 4 3 2,786
Finance costs (241) (186) (410)
(Loss) / profit before income tax (24,384) (18,845) 10,927
Income tax 3,404 2,631 1,730
(Loss) / profit for the period (20,980) (16,214) 12,657
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations 6 5 25
Total comprehensive (loss) / profit
for the period (20,974) (16,209) 12,682
Basic and diluted (loss) / earnings 2 (13) cents (10) pence 16 pence
per ordinary share from operations
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
Condensed Consolidated Statement of Financial Position (unaudited)
As at 31 October 2019
31 October 31 October 31 January
2019 2019 2019
(Adjusted*)
$000s GBP000s GBP000s
ASSETS
Non-current assets
Goodwill 2,347 1,814 1,814
Intangible assets 13,049 10,085 10,604
Property, plant and equipment 1,594 1,232 1,540
16,990 13,131 13,958
Current assets
Trade and other receivables 11,583 8,953 13,491
Current tax receivable 4,740 3,663 6,328
Cash and cash equivalents 17,600 13,602 26,858
33,923 26,218 46,677
------------------------------------- --------- --------- ---------
Total assets 50,913 39,349 60,635
LIABILITIES
Non-current liabilities
Lease liabilities (523) (404) (647)
Deferred revenue (591) (457) (831)
Provisions for other liabilities and
charges (2,603) (2,012) (1,851)
Deferred tax liability (2,046) (1,581) (1,675)
(5,763) (4,454) (5,004)
Current liabilities
Trade and other payables (9,341) (7,220) (8,733)
Lease liabilities (463) (358) (358)
Deferred revenue (485) (375) (3,374)
Contingent consideration (104) (80) (629)
(10,393) (8,033) (13,094)
Total liabilities (16,156) (12,487) (18,098)
Net assets 34,757 26,862 42,537
EQUITY
Share capital 2,077 1,605 1,604
Share premium account 120,082 92,806 92,806
Share-based payment reserve 1,560 1,206 1,148
Merger reserve 3,917 3,027 3,027
Special reserve 25,869 19,993 19,993
Currency translation reserve 79 61 56
Accumulated losses reserve (118,827) (91,836) (76,097)
Total equity 34,757 26,862 42,537
-------------------------------------- --------- ---------
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
Condensed Consolidated Statement of Cash Flows (unaudited)
For the nine months ended 31 October 2019
Nine months Nine months Nine months
ended ended ended
31 October 31 October 31 October
2019 2019 2018
(Adjusted*)
$000s GBP000s GBP000s
Cash flows from operating activities
(Loss) / profit before income tax (24,384) (18,845) 10,927
(24,384) (18,845) 10,927
Adjusted for:
Gain on re-measurement of financial
liabilities on funding arrangements -- -- (539)
Loss on recognition of contingent consideration
payable -- -- 860
Finance income (4) (3) (2,786)
Finance costs 241 186 410
Foreign exchange gain (133) (103) (1,056)
Depreciation 554 428 483
Amortisation of intangible fixed assets 805 622 622
Loss on disposal of assets 13 10 24
Research and development expenditure
credit -- -- (156)
Impairment of goodwill and intangible
assets -- -- 3,986
Share-based payment 690 533 4,263
Adjusted (loss) / profit from operations
before changes in working capital (22,218) (17,172) 17,038
Decrease / (increase) in prepayments
and other receivables 5,417 4,186 (1,654)
Decrease in deferred revenue (4,365) (3,374) (33,973)
Decrease in trade and other payables (2,323) (1,796) (3,719)
Cash used in operations (23,489) (18,156) (22,308)
Contingent consideration paid (710) (549) --
Taxation received 6,902 5,334 172
RDEC credit received 211 163 --
Net cash used in operating activities (17,086) (13,208) (22,136)
------------------------------------------------ --------
Investing activities
Purchase of property, plant and equipment (167) (129) (56)
Purchase of intangible assets (133) (103) (5)
Interest received 4 3 3
Net cash used in investing activities (296) (229) (58)
------------------------------------------------ -------- -------- --------
Financing activities
Proceeds from issue of share capital -- -- 15,000
Transaction costs on share capital issued -- -- (858)
Proceeds from exercise of share options 1 1 102
Repayment of lease liabilities (346) (268) (240)
Net cash (used in) / generated from
financing activities (345) (267) 14,004
Decrease in cash and cash equivalents (17,727) (13,704) (8,190)
Effect of exchange rates in cash and
cash equivalents 575 448 1,132
Cash and cash equivalents at beginning
of the period 34,752 26,858 20,102
Cash and cash equivalents at end of
the period 17,600 13,602 13,044
------------------------------------------------ -------- --- -------- --- -------- ---
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
Condensed Consolidated Statement of Changes in Equity (unaudited)
Nine months ended 31 October 2019
Share Share-based Currency Accumulated
Share premium payment Merger Special translation losses
capital account reserve reserve reserve reserve reserve Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 31 January 2019
(as previously reported) 1,604 92,806 1,148 3,027 19,993 56 (76,092) 42,542
Change in accounting
policy (full retrospective
application IFRS 16) -- -- -- -- -- -- (5) (5)
At 31 January 2019
(Adjusted*) 1,604 92,806 1,148 3,027 19,993 56 (76,097) 42,537
---------------------------- -------- -------- ------- ---- -------- -------- ------------ -------- -------
Loss for the period -- -- -- -- -- -- (16,214) (16,214)
Currency translation
adjustment -- -- -- -- -- 5 -- 5
Total comprehensive
loss for the period -- -- -- -- -- 5 (16,214) (16,209)
Share options exercised 1 -- -- -- -- -- -- 1
Share-based payment -- -- 533 -- -- -- -- 533
Share-based payment
reserve transfer -- -- (475) -- -- -- 475 --
At 31 October 2019 1,605 92,806 1,206 3,027 19,993 61 (91,836) 26,862
-------- -------- ------- ---- -------- -------- ------------ -------- -------
Year ended 31 January 2019
Share Share-based Currency Accumulated
Share premium payment Merger Special translation losses
capital account reserve reserve reserve reserve reserve Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 31 January 2018
(as previously reported) 736 60,237 6,743 3,027 19,993 37 (93,957) (3,184)
Change in accounting
policy (full retrospective
application IFRS 16) -- -- -- -- -- -- 32 32
At 31 January 2018
(Adjusted*) 736 60,237 6,743 3,027 19,993 37 (93,925) (3,152)
-------- ------- -------- --- -------- -------- ------------ -------- -------
Profit for the year
(Adjusted*) -- -- -- -- -- -- 7,490 7,490
Currency translation
adjustment -- -- -- -- -- 19 -- 19
Total comprehensive
profit for the period
(Adjusted*) -- -- -- -- -- 19 7,490 7,509
New share capital issued 864 33,784 -- -- -- -- -- 34,648
Transaction costs on
share capital issued -- (1,313) -- -- -- -- -- (1,313)
Share options exercised 4 98 -- -- -- -- -- 102
Share-based payment -- -- 4,743 -- -- -- -- 4,743
Share-based payment
reserve transfer -- -- (10,338) -- -- -- 10,338 --
At 31 January 2019
(Adjusted*) 1,604 92,806 1,148 3,027 19,993 56 (76,097) 42,537
Nine months ended 31 October 2018
Share Share-based Currency Accumulated
Share premium payment Merger Special translation losses
capital account reserve reserve reserve reserve reserve Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 31 January 2018
(as previously reported) 736 60,237 6,743 3,027 19,993 37 (93,957) (3,184)
Change in accounting
policy (full retrospective
application IFRS 16) -- -- -- -- -- -- 32 32
At 31 January 2018
(Adjusted*) 736 60,237 6,743 3,027 19,993 37 (93,925) (3,152)
---------------------------- -------- ------- ----------- -------- -------- ------------ -------- -------
Profit for the period
(Adjusted*) -- -- -- -- -- -- 12,657 12,657
Currency translation
adjustment -- -- -- -- -- 25 -- 25
Total comprehensive
profit for the period
(Adjusted*) -- -- -- -- -- 25 12,657 12,682
New share capital issued 83 14,917 -- -- -- -- -- 15,000
Transaction costs on
share capital issued -- (858) -- -- -- -- -- (858)
Share options exercised 4 98 -- -- -- -- -- 102
Share-based payment -- -- 4,263 -- -- -- -- 4,263
At 31 October 2018
(Adjusted*) 823 74,394 11,006 3,027 19,993 62 (81,268) 28,037
-------- ------- ----------- -------- -------- ------------ -------- -------
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
NOTES TO THE FINANCIAL INFORMATION
For the three and nine months ended 31 October 2019
1. Basis of Accounting
The unaudited condensed consolidated interim financial statements of
Summit Therapeutics plc ('Summit' and the 'Company') and its
subsidiaries (together, the 'Group') for the three and nine months ended
31 October 2019 have been prepared in accordance with International
Financial Reporting Standards ('IFRS') and International Financial
Reporting Interpretations Committee ('IFRIC') interpretations as issued
by the International Accounting Standards Board and with those parts of
the Companies Act 2006 applicable to companies reporting under IFRS
including those applicable to accounting periods ending 31 January 2020
and the accounting policies set out in Summit's consolidated financial
statements. There have been no changes to the accounting policies as
contained in the annual consolidated financial statements as of and for
the year ended 31 January 2019 other than as described below. These
condensed consolidated interim financial statements do not include all
information required for full statutory accounts within the meaning of
section 434 of Companies Act 2006 and should be read in conjunction with
the consolidated financial statements of the Group as at 31 January 2019
(the '2019 Accounts'). The 2019 Accounts, on which the Company's
auditors delivered an unqualified audit report, are available on the
Group's website at www.summitplc.com and were delivered to the Registrar
of Companies following the 2019 Annual General Meeting. The auditor's
report did not contain any statement under section 498 of the Companies
Act 2006 but did contain a statement from the auditors drawing the
shareholders' attention to the Group's need to raise additional capital
as noted below.
Whilst the financial information included in this announcement has been
prepared in accordance with IFRS and IFRIC interpretations as issued by
the International Accounting Standards Board and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS, this
announcement does not itself contain sufficient information to comply
with IFRS.
The interim financial statements have been prepared assuming the Group
will continue on a going concern basis. Based on management's forecasts,
the Group's existing cash and cash equivalents, anticipated payments
from BARDA under its contract for the development of ridinilazole and
anticipated payments from CARB-X under its contract for the development
of its gonorrhoea antibiotic programme are expected to be sufficient to
enable the Group to fund its operating expenses and capital expenditure
requirements through to at least 31 January 2020.
On 6 December 2019, the Group announced a proposed Fundraising of
approximately $50 million through a subscription and placing of new
ordinary shares and warrants to existing investors ('Fundraising'),
which is subject to certain shareholder approvals being obtained at a
general meeting to be held on 23 December 2019, and certain customary
closing conditions being satisfied. If shareholder approval is obtained,
the net proceeds of the Fundraising, together with the Group's existing
cash resources and funding agreements, are expected to extend its cash
runway to 31 January 2021. The Group expects to use these funds to
support the continued Phase 3 clinical programme of ridinilazole for the
treatment of CDI; preparatory activities to support commercial launch of
ridinilazole, if approved; development of early-stage research projects;
and general corporate purposes. Should the Company not receive
shareholder approval, the Fundraising would not proceed and the Group
would need to take immediate steps to preserve cash including, amongst
others, stopping the ongoing Phase 3 clinical trials of ridinilazole and
ceasing its Discuva Platform activities and associated research
programmes. The failure of the Group to obtain the necessary shareholder
approval to enable the proposed Fundraising to proceed would therefore
have a material adverse effect on the Group's business, results of
operations and financial condition.
These circumstances represent a material uncertainty which may cast and
raise significant doubt on the Group's ability to continue as a going
concern. The interim financial statements do not contain any adjustments
that might result if the Group was unable to continue as a going
concern.
The financial information for the three and nine month periods ended 31
October 2019 and 2018 are unaudited.
Solely for the convenience of the reader, unless otherwise indicated,
all pound sterling amounts stated in the Consolidated Statement of
Financial Position as at 31 October 2019, the Consolidated Statement of
Comprehensive Income for the three and nine months ended 31 October 2019
and Consolidated Statement of Cash Flows for the nine months ended 31
October 2019 have been translated into US dollars at the rate on 31
October 2019 of $1.2939 to GBP1.00. These translations should not be
considered representations that any such amounts have been, could have
been or could be converted into US dollars at that or any other exchange
rate as at that or any other date.
The Board of Directors of the Company approved this statement on 17
December 2019.
Adoption of IFRS 16 'Leases'
IFRS 16 specifies how to recognise, measure, present and disclose
leases. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for all leases
unless the lease term is 12 months or less or the underlying asset has a
low value. The standard is effective for reporting periods beginning on
or after 1 January 2019 and replaces the accounting standard IAS 17
'Leases'. Two adoption methods are permitted for transition:
retrospectively to all prior reporting periods presented in accordance
with IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors', with certain practical expedients permitted; or retrospectively
with the cumulative effect of initially applying the standard recognised
at the date of initial application.
Accounting policy
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease based on whether the contract conveys the right to
control the use of an identified asset for a period of time in exchange
for consideration. The Group recognises a right-of-use asset within
property, plant and equipment and a lease liability at the lease
commencement date. The right-of-use asset is initially measured based on
the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received. The assets are
depreciated to the earlier of the end of the useful life of the
right-of-use asset or the lease term using the straight-line method. The
lease term includes periods covered by an option to extend if the Group
is reasonably certain to exercise that option and periods covered by an
option to terminate if it is reasonably certain not to exercise that
option. The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the Group's incremental borrowing
rate. The lease liability is subsequently measured at amortised cost
using the effective interest method and is remeasured when there is a
change in future contractual lease payments or if the Group changes its
assessment of whether it will exercise a purchase, extension or
termination option.
The Group adopted this new standard effective 1 February 2019, as
required, using the full retrospective transition method in accordance
with IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors'. Under this method, the Group will adjust its results for the
years ended 31 January 2018 and 2019 and applicable interim periods, as
if IFRS 16 had been effective for those periods. The Group has assessed
the effect of adoption of this standard as it relates to its UK leased
properties in Oxford and Cambridge and has concluded that any other
contracts are not within the scope of IFRS 16 or are of low value, for
which the Group has elected not to apply the requirement of IFRS 16.
Due to the adoption of IFRS 16, the Group has recognised both
right-of-use assets and lease liabilities related to its UK leased
properties. The Group no longer recognises a lease incentive accrual and
has reclassified some costs from research and development expenses and
general and administration expenses to finance costs, being the interest
expense on lease liabilities. In addition, some amounts previously
presented as cash outflows from operating activities in the Group's
Consolidated Statement of Cash Flows are now presented as cash flows
from investing or financing activities.
This change in accounting policy has been reflected retrospectively in
the comparative Statement of Financial Position for the year ended 31
January 2019, the comparative Statement of Comprehensive Income,
Statement of Cash Flows and Statement of Changes in Equity for the nine
months ended 31 October 2018, including the opening accumulated losses
reserve at 1 February 2018 and 1 February 2019.
The impact of the change in accounting policy to IFRS 16 discussed above
on the comparatives to the unaudited condensed consolidated interim
financial statements is disclosed in the following tables.
Original Adjusted
Year ended Year ended
Impact on Unaudited Condensed 31 January 31 January
Consolidated 2019 2019 Impact
Statement of Financial Position GBP000s GBP000s GBP000s
-------------------------------------
Non-current assets
Property, plant and equipment 616 1,540 924
Current assets
Trade and other receivables 13,547 13,491 (56)
Non-current liabilities
Lease liabilities -- (647) (647)
Current liabilities
Trade and other payables (8,865) (8,733) 132
Lease liabilities -- (358) (358)
Equity
Accumulated losses reserve (76,092) (76,097) (5)
Original Adjusted
Three months Three months
ended ended
Impact on Unaudited Condensed 31 October 31 October
Consolidated 2018 2018 Impact
Statement of Comprehensive
Income GBP000s GBP000s GBP000s
--------------------------------
Operating expenses
Research and development (8,196) (8,195) 1
General and administration (4,658) (4,654) 4
Operating loss (9,354) (9,349) 5
Finance costs (49) (60) (11)
Loss for the period (8,128) (8,134) (6)
-------------------------------- ------------ ------------ ------
Original Adjusted
Nine months Nine months
ended ended
Impact on Unaudited Condensed 31 October 31 October
Consolidated 2018 2018 Impact
Statement of Comprehensive
Income GBP000s GBP000s GBP000s
----------------------------------
Operating expenses
Research and development (29,634) (29,640) (6)
General and administration (9,319) (9,309) 10
Operating profit 8,547 8,551 4
Finance costs (377) (410) (33)
Profit for the period 12,686 12,657 (29)
---------------------------------- ----------- ----------- ------
Original Adjusted
Nine months Nine months
ended ended
Impact on Unaudited Condensed 31 October 31 October
Consolidated 2018 2018 Impact
Statement of Cash Flows GBP000s GBP000s GBP000s
Profit before income tax 10,956 10,927 (29)
Adjusted for:
Finance costs 377 410 33
Depreciation 233 483 250
Increase in trade and other
receivables (1,661) (1,654) 7
Decrease in trade and other
payables (3,698) (3,719) (21)
Financing activities
Repayment of lease liabilities -- (240) (240)
Impact on net cash flows --
The Group will continue to monitor interpretations released by the IFRS
Interpretations Committee and amendments to IFRS 16 and will, as
appropriate, adopt these from the effective dates.
2. (Loss) / earnings per Share Calculation
The calculation of (loss) / earnings per share is based on the following
data:
Three months Three months Nine months Nine months
ended ended ended ended
31 October 31 October 31 October 31 October
2019 2018 2019 2018
(Adjusted*) (Adjusted*)
000s 000s 000s 000s
(Loss) / profit for the
period (7,030) (8,134) (16,214) 12,657
Weighted average number
of ordinary shares for basic
(loss) / earnings per share 160,495 82,137 160,463 80,279
Effect of dilutive potential
ordinary shares (share options
and warrants) -- -- -- 527
Weighted average number
of ordinary shares for diluted
(loss) / earnings per share 160,495 82,137 160,463 80,806
Basic (loss) / earnings
per ordinary share from
operations GBP (0.04) (0.10) (0.10) 0.16
Diluted (loss) / earnings
per ordinary share from
operations GBP (0.04) (0.10) (0.10) 0.16
-------------------------------- --------- -------- --- -------- -----------
* See Note 1 - 'Basis of Accounting - Adoption of IFRS 16 'Leases"
Basic (loss) / earnings per ordinary share has been calculated by
dividing the (loss) / profit for the three and nine months ended 31
October 2019 by the weighted average number of shares in issue during
the three and nine months ended 31 October 2019. Diluted earnings per
ordinary share has been calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
potentially dilutive ordinary shares. Potentially dilutive ordinary
shares represent the number of shares that could have been acquired at
fair value based on the monetary value of the subscription rights
attached to share options in-the-money compared with the number of
shares that would have been issued assuming the exercise of share
options in-the-money.
IAS 33 'Earnings per Share' requires the presentation of diluted
earnings per share where a company could be called upon to issue shares
that would decrease net profit or loss per share. As the Group reported
net losses for the three and nine months ended 31 October 2019, the
weighted average number of ordinary shares outstanding used to calculate
the diluted (loss) / earnings per ordinary share is the same as that
used to calculate the basic (loss) / earnings per ordinary share, as the
exercise of share options would have the effect of reducing loss per
ordinary share which is not dilutive.
3. Issue of Share Capital
On 23 April 2019, 104,877 ordinary shares were issued following the
exercise of restricted stock units ('RSUs'). This exercise of RSUs
raised net proceeds of GBP1,049.
The new ordinary shares issued in connection with the RSUs exercised
rank pari passu with existing ordinary shares.
As of 31 October 2019, the number of ordinary shares in issue was
160,494,758.
4. Post Balance Sheet Events
On 6 December 2019, the Group announced a proposed Fundraising of
approximately $50 million through a subscription of 166,157,050 new
ordinary shares and a placing of 9,221,400 new ordinary shares at a
subscription and placing price of 22.1 pence per new ordinary share
('Fundraising'). The Fundraising requires approval by shareholders at a
general meeting of the Company to be held on 23 December 2019.
As a condition of the proposed Fundraising, it is proposed that the
admission of the Company's ordinary shares to trading on AIM will be
cancelled ('AIM Delisting'). The Company's American Depositary Shares
('ADSs') will remain listed on the Nasdaq Stock Market where one ADS is
represented by five ordinary shares. The proposed AIM Delisting reflects
the increasing focus of Summit's business operations on the United
States, and specifically the Company's plans to commercialise
ridinilazole in the United States with its own specialised sales force,
if approved.
Should shareholders approve the AIM Delisting, the final day of trading
on AIM of the ordinary shares is expected to be 21 February 2020. On
that basis, the AIM Delisting would take effect at 7:00 am on 24
February 2020. Thereafter, ordinary shares will continue to be capable
of being held and transferred in certificated form, but there will be no
public market in the UK on which shareholders will be able to trade
ordinary shares with all public trading of securities in the Company
taking place on Nasdaq by way of ADSs.
-END-
(END) Dow Jones Newswires
December 17, 2019 07:00 ET (12:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Summit Therapeutics (LSE:SUMM)
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