Summit Therapeutics Reports Financial Results and Operational Progress for the First Quarter Ended 30 April 2019

World News: . []

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (MAR).

Revenue was £0.2 million for the three months ended 30 April 2019 compared to £3.9 million for the three months ended 30 April 2018. This decrease was principally due to the reduction in revenue related to the Sarepta licence and collaboration agreement following the Group’s decision to discontinue development of ezutromid in June 2018. Revenue recognised during the three months ended 30 April 2019 relating to the cost-share arrangement under the Sarepta agreement amounted to £0.1 million.

The Group also recognised £0.1 million of revenue during the three months ended 30 April 2019 relating to the receipt of a $2.5 million (£1.9 million) upfront payment in respect of the licence and commercialisation agreement signed with Eurofarma Laboratórios SA ('Eurofarma') in December 2017.

Other operating income was £4.9 million for the three months ended 30 April 2019, as compared to £3.5 million for the three months ended 30 April 2018. This increase resulted primarily from the recognition of operating income from Summit’s funding contract with BARDA for the development of ridinilazole, which was £4.6 million for the three months ended 30 April 2019 as compared to £3.3 million for the three months ended 30 April 2018.

The Group also recognised operating income of £0.2 million during the three months ended 30 April 2019 related to the Group's CARB-X award supporting the development of SMT-571 for the treatment of gonorrhoea.

Research and development expenses decreased by £3.3 million to £8.3 million for the three months ended 30 April 2019 from £11.6 million for the three months ended 30 April 2018.

Expenses related to the CDI programme increased by £0.8 million to £5.8 million for the three months ended 30 April 2019 from £5.0 million for the three months ended 30 April 2018. This increase primarily related to clinical and manufacturing activities related to the Ri-CoDIFy Phase 3 clinical trials of ridinilazole that commenced in February 2019.

Investment in the Group's antibiotic pipeline development activities was £0.7 million for the three months ended 30 April 2019 compared to £0.2 million for the three months ended 30 April 2018. This increase primarily related to preclinical development activities for SMT-571 for the treatment of gonorrhoea and the DDS-04 series for the treatment of Enterobacteriaceae infections.

Expenses related to the Duchenne muscular dystrophy ('DMD') programme decreased by £4.1 million to £0.1 million for the three months ended 30 April 2019 from £4.2 million for the three months ended 30 April 2018, as a result of the discontinuation of the development of ezutromid in June 2018. The Group does not expect to incur further significant cost for this programme.

Other research and development expenses decreased by £0.5 million to £1.7 million during the three months ended 30 April 2019 as compared to £2.2 million during the three months ended 30 April 2018, which was driven by a decrease in staffing and facilities costs reflecting implementation of cost-cutting measures following the decision to discontinue development of ezutromid in June 2018.

General and administration expenses decreased by £0.6 million to £1.7 million for the three months ended 30 April 2019 from £2.3 million for the three months ended 30 April 2018. This decrease was driven by a reduction in staff related costs and legal and professional fees, offset by a net negative movement in exchange rate variances.

Finance costs recognised during the three months ended 30 April 2019 relate to lease liability interest payable and the unwinding of the discount associated with provisions. Finance costs were £0.1 million for the three months ended 30 April 2019 compared to £0.2 million for the three months ended 30 April 2018. This decrease relates to the cessation of the unwinding of the discount following the remeasurement of the financial liabilities on funding arrangements relating to DMD-related US not for profit organisations to £nil in June 2018.

The income tax credit for the three months ended 30 April 2019 was £0.8 million as compared to £0.9 million for the three months ended 30 April 2018. This net decrease was driven by a decrease in the Group's accrued UK research and development tax credit, reflecting lower research and development expenditure, offset by a net positive movement in taxes relating to the US operations and the release of deferred tax liabilities associated with the amortisation of intangible assets.

Loss before income tax was £4.9 million for the three months ended 30 April 2019 compared to a loss before income tax of £6.8 million for the three months ended 30 April 2018. Net loss for the three months ended 30 April 2019 was £4.0 million with a basic loss per share of 3 pence compared to a net loss of £5.8 million for the three months ended 30 April 2018 with a basic loss per share of 8 pence.

The Group had a net cash inflow of £1.3 million for the three months ended 30 April 2019 as compared to £7.2 million for the three months ended 30 April 2018.

As at 30 April 2019, total cash and cash equivalents held were £28.3 million (31 January 2018: £26.9 million).

The Group believes that its 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 candidate, will be sufficient to enable the Group to fund its operating expenses and capital expenditure requirements through 31 January 2020.

* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 16 ‘’’

* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 16 ‘’’

For the three months ended 30 April 2019

* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 16 ‘’’

* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 16 ‘’’

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

For the three months ended 30 April 2019

The unaudited condensed consolidated interim financial statements of Summit Therapeutics plc ('Summit') and its subsidiaries (together, the ‘Group’) for the three months ended 30 April 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 will be 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 IFRSs.

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 candidate are expected to be sufficient to enable the Group to fund its operating expenses and capital expenditure requirements through 31 January 2020. The Group will need to raise additional funding in order to support, beyond this date, its planned 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 the United States and the United Kingdom. Should the Group be unable to raise additional funding, management has the ability to take mitigating action to fund its operating expenses and capital expenditure requirements in relation to its clinical development activities for only a short period beyond 12 months from the date of issuance of these financial statements. 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 Group is evaluating various options 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. Whilst the Group believes that funds would be available in this manner before the end of January 2020, there can be no assurance that the Group will be able to generate funds, on terms acceptable to the Group, on a timely basis or at all, which would impact the Group’s ability to continue as a going concern. The failure of the Group to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Group’s business, results of operations and financial condition.

The financial information for the three month periods ended 30 April 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 30 April 2019 and the Consolidated Statement of Comprehensive Income and Consolidated Statement of Cash Flows for the three months ended 30 April 2019 have been translated into US dollars at the rate on 30 April 2019 of $1.303 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 12 June 2019.

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 '. Two adoption methods are permitted for transition: retrospectively to all prior reporting periods presented in accordance with IAS 8 ', with certain practical expedients permitted; or retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application.

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 three months ended 30 April 2018, including the opening accumulated losses reserve at 1 February 2018 and 1 February 2019.

During the year ended 31 January 2019, the Group re-assessed the allocation of staff related expenses, totalling £0.3 million, previously reported as general and administration expenses during the three months ended 30 April 2018. These are now presented as research and development expenses.

The impact of the change in accounting policy to IFRS 16 and the allocation of the staff related expenses discussed above on the comparatives to the unaudited condensed consolidated interim financial statements is disclosed in the following tables.

The Group will continue to monitor interpretations released by the IFRS Interpretations Committee and amendments to IFRS 16 and, as appropriate, will adopt these from the effective dates.

The loss per share has been calculated using the loss for the period and dividing this by the weighted average number of ordinary shares in issue during the three months ended 30 April 2019: 160,398,130 (for three months ended 30 April 2018: 76,571,101).

Since the Group has reported a net loss, diluted loss per ordinary share is equal to basic loss per share.

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 £1,049.

The new ordinary shares issued in connection with the RSUs exercised rank with existing ordinary shares.

As of 30 April 2019, the number of ordinary shares in issue was 160,494,758.

-END-

More news and information about Summit Therapeutics plc

Published By:

Globe Newswire: 12:00 GMT Wednesday 12th June 2019

Published: .

Search for other references to "summit" on SPi News


Share

Previous StoryNext Story

SPi News is published by Sector Publishing Intelligence Ltd.
© Sector Publishing Intelligence Ltd 2019. [Admin Only]
 
Sector Publishing Intelligence Ltd.
Agriculture House, Acland Road, DORCHESTER, Dorset DT1 1EF United Kingdom
Registered in England and Wales number 07519380.
 
Privacy Policy | Terms and Conditions | Contact Us