Summit Corporation plc
('Summit' or 'the Company')
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2014
Oxford, UK, 30 April 2014, Summit (AIM: SUMM), a drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy and C. difficile infections, today reports its preliminary results for the year ended 31 January 2014.
HIGHLIGHTS
Product Development
Duchenne Muscular Dystrophy ('DMD')
- Lead utrophin modulator SMT C1100 progressed into clinical trials in DMD patients
- Strategic Alliance formed with University of Oxford to strengthen and expand development of next generation utrophin modulators
C. difficile Infection ('CDI')
- FDA clearance of IND application for Phase 2 study of novel antibiotic SMT19969 in March 2014
- Phase 1 healthy volunteer trial successfully completed and reported encouraging data on future efficacy with SMT19969 highly sparing of normal gut flora bacteria
Corporate
- New funding secured from broad range of sources including equity fundraising with existing and new investors, government grant and charitable foundations
Financial
- Cash position at 31 January 2014: £2.0 million (31 January 2013: £3.4 million)
- £22.0 million (£20.7m net) fundraise completed in March 2014
- Operational expenditure in-line with expectation, reflecting increased clinical development activities
- Loss for year ended 31 January 2014 of £6.1 million (31 January 2013: £4.2 million)
Frank Armstrong, Non-Executive Chairman of Summit commented: "It has been a significant period of progress for Summit with the DMD and CDI programmes as the DMD programme advanced into patient clinical trials and the CDI programme poised to enter Phase 2 studies shortly.
"With the funds secured from investors, charitable foundations and the UK Government, Summit is now well placed to execute our future clinical plans that seek to establish the potential of our two programmes as potential life-changing treatments for two serious diseases."
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Notes to Editors
About Summit
Summit is an Oxford, UK based drug discovery and development Company targeting high-value areas of unmet medical need including Duchenne Muscular Dystrophy and C. difficile infection. Summit is listed on the AIM market of the London Stock Exchange and trades under the ticker symbol SUMM. Further information is available at www.summitplc.com and follow Summit on Twitter (@summitplc).
For more information, please contact:
| Summit Glyn Edwards / Richard Pye | Tel: +44 (0)1235 443 951 |
| Cairn Financial Advisers LLP (Nominated Adviser) Liam Murray / Tony Rawlinson | Tel: +44 (0)20 77148 7900 |
| N+1 Singer (Broker) Aubrey Powell / Will Goode | Tel: +44 (0)20 7496 3000 |
| Peckwater PR (Financial public relations, UK) Tarquin Edwards | Tel: +44 (0)7879 458 364 tarquin.edwards@peckwaterpr.co.uk |
| MacDougall Biomedical Communications (US media contact) Michelle Avery | Tel: +1 781-235-3060 |
Forward Looking Statements
This announcement contains "forward-looking statements", including, but not limited to, statements about the discovery, development and commercialisation of programme assets. These forward-looking statements are statements based on the Company's current intentions, beliefs and expectations, which include, among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industry in which the Company operates. No forward-looking statement is a guarantee of future performance and actual results could differ materially from those expressed or implied in the forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements or information. Forward-looking statements and information by their nature involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These include but are not limited to: adverse results in clinical or preclinical development studies; delays in obtaining regulatory approval; failure to obtain patent protection for inventions; commercial limitations imposed by patents owned or controlled by third parties; being unable to secure partnership agreements to develop and commercialise programme assets; being unable to secure the necessary funding to conduct any proposed research and development studies; and the ability to retain and recruit key personnel. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this announcement to reflect any changes in expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based, except as required by applicable law.
CHAIRMAN'S STATEMENT
Strategic Focus
In my first annual statement to shareholders, I am pleased to report that substantial progress has been made across all areas of the business.
Summit remains focused on the development of two independent clinical stage programmes to treat Duchenne Muscular Dystrophy ('DMD') and C. difficile Infection ('CDI') following the Board's strategic decision to concentrate on these two potentially high value assets. This strategy has enabled the Company to allocate its scientific and financial resources more efficiently and adapt to the needs of the respective programmes as they progress into patient clinical trials.
Effective treatments for DMD and CDI could have significant commercial value and the priority for Summit is to establish the clinical benefit that our two development programmes may have as potential life changing treatments for these serious diseases.
Programme Update
It has been a significant period with both of our drug programmes having now entered into patient clinical trials.
In December 2013 the first patient with DMD was enrolled and dosed in a Phase 1b clinical trial of our lead utrophin modulator SMT C1100. This is the first time a utrophin modulator has been administered to patients with DMD and represents an important step forward both for our programme and for the approach. This study is an important step towards starting a proof of concept efficacy trial that will seek to validate the potential of utrophin modulation as a new treatment paradigm for all patients with this fatal muscle wasting disease.
Of longer-term importance was the formation of a Strategic Alliance with the University of Oxford to collaborate on the development of next generation utrophin-based medicines. This Alliance supplements our own internal research in novel utrophin approaches and ensures that Summit remains at the forefront of utrophin modulation as we seek to generate a deep pipeline with the potential to deliver longer-term value.
In March 2014 our Investigational New Drug ('IND') application to initiate a Phase 2 proof of concept study of our selective antibiotic SMT19969 for the treatment of CDI received clearance from the US Food and Drug Administration. This trial will compare the efficacy of SMT19969 against the current standard of care and seek to demonstrate the potential of our novel antibiotic in both treating initial infection and to address the high rates of disease recurrence which is the key clinical issue.
Financial Overview
The Company has strengthened its financial position after receiving support from investors, charitable foundations and the UK Government.
The cash position at 31 January 2014 was £2.0 million (31 January 2013: £3.4 million) but this was significantly increased following completion of a £22.0 million financing before expenses in March 2014 through the issue of new shares. This share placement received support from existing investors and we were pleased to also attract interest from a number of specialist healthcare and institutional investors based in the US and Europe.
Our two programmes also continue to receive support from a number of organisations. The Wellcome Trust is providing substantial funding for our novel CDI antibiotic while the DMD programme is benefiting from a £2.4 million grant from the UK Government's Biomedical Catalyst scheme, along with support from the DMD community.
Consequently Summit is now in a stronger position to fund the increased expenditure associated with executing our clinical plans and progressing the development of both programmes.
Board changes
The structure of the Board evolved to reflect some of the key developments at the Company. In June 2013, Dr Barry Price assumed a Non-Executive Director role following my appointment as Chairman while Professor Stephen Davies was re-appointed to the Board in November 2013 reflecting the strategic importance to Summit of the Oxford Alliance.
Outlook
Summit has now entered an exciting period in its development. Both programmes have begun patient clinical trials, the future results of which should provide a fuller understanding about the potential of these life-changing treatments for two serious diseases.
I would like to thank all of our staff for their continuing hard work and commitment. I also sincerely appreciate the continued support of our shareholders and look forward to updating you on our future progress.
Frank Armstrong, FRCPE, FFPM
Non-Executive Chairman
29 April 2014
FINANCIAL REVIEW
Cash and operating income and expenditure
Cash at 31 January 2014 was £2.0m (31 January 2013: £3.4m) with net cash used in operating activities for the year ended 31 January 2014 of £5.9m (2012/2013: £3.1m). Combined revenues and other operating income for the year were £1.84m (2012/13: £1.89m). In detail, revenues were £1.37m (2012/13: £1.81m), arising from recognition of milestone payments from the Wellcome Trust supporting development of the CDI antibiotic. Other operating income of £0.47m (2012/13: £0.08m) related to recognition of grant receipts from the Biomedical Catalyst award and funding from DMD charities supporting biomarker studies and other development activities on our lead utrophin modulator for the treatment of DMD. The Biomedical Catalyst award is worth up to £2.4m and it is anticipated that further income will be recognised from this during the current financial years as SMT C1100 progresses through clinical development.
The progression of the programmes into Phase 1 clinical trials and other activities related to the preparation for Phase 2 studies has led to an increase in expenditure on research and development to £6.6m (2012/13: £3.6m). This increase was in-line with expectations. General and administrative costs were £1.7m (2012/13: £1.6m).
Losses
Losses before interest, tax, depreciation and amortisation were £6.7m (2012/13: £4.5m). Net loss for the year was £6.1m (2012/13: £4.2m) and 1.49 pence per share (2012/13: 1.34 pence per share).
Share Issues
The strategic alliance with the University of Oxford, announced in November 2013, expanded Summit's next generation utrophin modulator programme for the treatment of DMD. Exclusive commercial rights to a pipeline of novel, early stage utrophin modulators and core biological screening technology were secured through acquisition of the University of Oxford spin-out company MuOx Limited. Summit issued 35,408,845 new Ordinary shares at 9.38 pence per share for the acquisition of MuOx Limited and warrants over an additional 7,081,771 new Ordinary shares were also issued to the University's technology commercialisation company ISIS Innovation Limited. The warrants are exercisable at 1 penny per share subject to achievement of certain key pre-clinical and clinical milestones.
In July 2013 a placing of 92,269,391 new Ordinary shares at 5.0 pence per share with new and existing institutional investors in a placing and offer for subscription to raise an additional £4.6m (£4.4m net of costs). The exercise of warrants over 1,000,000 Ordinary shares at 5 pence per share in August 2013 raised net proceeds of £0.05m.
Post Period Events
The financial position has been significantly strengthened post the period under review. In March 2014 the issue of 338,461,540 new Ordinary shares at 6.5 pence per share through a Placing and Offer for Subscription to existing and new investors raised total proceeds of £22.0m (£20.7m net of costs). In the same month, Summit triggered receipt of a £1.9m milestone payment under the terms of the Wellcome Trust Translational Award following submission of the IND application to the FDA for our novel CDI antibiotic SMT19969. This milestone followed receipt in June 2013 of a £0.7m payment and means since the grant of the award in 2012, Summit has received £3.9m of the £4.0m.
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (audited)
For the year ended 31 January 2014
| Year ended 31 January 2014 | Year ended 31 January 2013 | ||
| Note | £000s | £000s | |
| Revenue | 1,375 | 1,814 | |
| Cost of sales | - | - | |
| Gross profit | 1,375 | 1,814 | |
| Other operating income | 469 | 81 | |
| Administrative expenses | |||
| Research and development | (6,564) | (3,624) | |
| General and administration | (1,737) | (1,638) | |
| Depreciation and amortisation | (26) | (93) | |
| Cessation of in-house discovery | - | (308) | |
| Impairment of intangible assets | - | (899) | |
| Release of provision | - | 205 | |
| Share based payment | (226) | (115) | |
| Total administrative expenses | (8,553) | (6,472) | |
| Operating loss | (6,709) | (4,577) | |
| Finance income | 9 | 11 | |
| Loss before income tax | (6,700) | (4,566) | |
| Income tax | 607 | 341 | |
| Loss for the year | (6,093) | (4,225) | |
| Loss and total comprehensive expense for the year attributable to owners of the parent | (6,093) | (4,225) | |
| Basic and diluted loss per ordinary share from continuing operations | (1.49)p | (1.34)p |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (audited)
As at 31 January 2014
| 31 January 2014 | 31 January 2013 | ||
| Note | £000s | £000s | |
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 3,493 | 171 | |
| Property, plant and equipment | 43 | 23 | |
| 3,536 | 194 | ||
| Current assets | |||
| Trade and other receivables | 431 | 461 | |
| Current tax | 634 | 343 | |
| Cash and cash equivalents | 2,030 | 3,379 | |
| 3,095 | 4,183 | ||
| Total assets | 6,631 | 4,377 | |
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | (1,852) | (1,376) | |
| Provisions for other liabilities and charges | (17) | (150) | |
| Total current liabilities | (1,869) | (1,526) | |
| Total liabilities | (1,869) | (1,526) | |
| Net assets | 4,762 | 2,851 | |
| EQUITY | |||
| Share capital | 10,075 | 8,788 | |
| Share premium account | 40,177 | 33,686 | |
| Share based payment reserve | 1,636 | 1,410 | |
| Merger reserve | (1,943) | (1,943) | |
| Retained earnings | (45,183) | (39,090) | |
| Total equity attributable to the equity shareholders of the Parent | 4,762 | 2,851 |
CONSOLIDATED STATEMENT OF CASH FLOWS (audited)
For the year ended 31 January 2014
| Note | Year ended 31 January 2014 | Year ended 31 January 2013 | |
| £000s | £000s | ||
| Cash flows from operating activities | |||
| Loss before income tax | (6,700) | (4,566) | |
| (6,700) | (4,566) | ||
| Adjusted for: | |||
| Finance income | (9) | (11) | |
| Foreign exchange loss | 18 | 5 | |
| Depreciation | 17 | 48 | |
| Amortisation of intangible fixed assets | 9 | 45 | |
| (Profit) / Loss on disposal of property, plant and equipment | (14) | 21 | |
| Impairment charge | - | 899 | |
| Movement in provisions | (133) | (55) | |
| Research and development expenditure credit | (29) | - | |
| Share based payment | 226 | 115 | |
| Adjusted loss from operations before changes in working capital and provisions | (6,615) | (3,499) | |
| Increase in trade and other receivables | (65) | (45) | |
| Increase in trade and other payables | 465 | 85 | |
| Cash used by operations | (6,215) | (3,459) | |
| Taxation received | 346 | 272 | |
| Net cash used in operating activities | (5,869) | (3,187) | |
| Investing activities | |||
| Proceeds from disposal of property, plant and equipment | 102 | - | |
| Purchase of property, plant and equipment | (37) | (33) | |
| Purchase of intangible assets | (10) | (43) | |
| Interest received | 9 | 11 | |
| Net cash generated by/(used in) investing activities | 64 | (65) | |
| Financing activities | |||
| Proceeds from issue of share capital | 4,663 | 5,000 | |
| Transaction costs on share capital issued | (207) | (445) | |
| Net cash generated from financing activities | 4,456 | 4,555 | |
| (Decrease) / Increase in cash and cash equivalents | (1,349) | 1,303 | |
| Cash and cash equivalents at beginning of year | 3,379 | 2,076 | |
| Cash and cash equivalents at end of year | 2,030 | 3,379 |
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 January 2014
1. Basis of accounting
This financial information for the years ended 31 January 2014 and 31 January 2013 does not constitute the statutory financial statements for the respective years and is an extract from the financial statements. It is based on, and is consistent with, that in the Group's statutory accounts for the year ended 31 January 2014 and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Financial statements for the year ended 31 January 2013 have been delivered to the Registrar of Companies. The auditors' reports on the financial statements for the years ended 31 January 2014 and 31 January 2013 were unqualified and did not contain statements under section 498 of the Companies Act 2006. The financial information in this report does not constitute statutory financial statement within the meaning of sections 434-436 of the Companies Act 2006.
The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretations Committee ('IFRIC') interpretations endorsed by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements are prepared in accordance with the historical cost convention. Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRSs adopted for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.
Copies of this announcement are available from the Company Secretary and are on the Company's website. The annual report and audited statutory financial statements for the year ended 31 January 2014 are expected to be distributed to shareholders shortly and will be available at the registered office of the Company. These will also be made available on the Company's website.
2. Acquisition of subsidiary
On 22 November 2013, the Group acquired 100% of the share capital of MuOx Limited, a University of Oxford spin-out company which holds exclusive rights to early stage utrophin modulators and core biological screening technology. As part of the transaction the Group entered into a number of key agreements including a sponsored research agreement, an exclusive option agreement over new IP developed and a warrant instrument.
The acquired business did not contribute any revenues (or costs) and did not contribute any net profit (or loss) from this date. If the acquisition had occurred on 1 February 2013, Group revenue would be unchanged and Group loss would be £6,113,000. These amounts have been calculated using the Groups accounting policies. No adjustments to the results in respect of fair value adjustments are required. Details of the net assets acquired are as follows:
Purchase consideration:
| Fair value of shares issued | £3,321,350 |
| Total purchase consideration | £3,321,350 |
The fair value of the shares issued was based on the published share price.
The assets and liabilities as of 22 November 2013 arising from the acquisition are as follows:
| Fair value | |
| Deed of Licence of Knowhow with University of Oxford | £3,321,350 |
| Fair value of net assets | £3,321,350 |
3. Share capital
| Year ended 31 January 2014 £000s | Year ended 31 January 2013 £000s | ||
| Allotted, called up and fully paid | |||
| 482,766,686 (2013: 354,088,450) Ordinary shares of 1p each | 4,828 | 3,541 | |
| 524,702,133 (2013: 524,702,133) Deferred shares of 1p each | 5,247 | 5,247 | |
| 10,075 | 8,788 |
The Deferred shares have no voting or dividend rights and on a return to capital there is the right to receive the amount paid up after the holders of the Ordinary shares have received the amount paid up on those Ordinary shares and an additional £1 million of return of capital per Ordinary share.
On 23 July 2013 the number of Ordinary shares was increased by 92,269,391 new Ordinary 1p shares. The shares rank pari passu with existing Ordinary shares. The equity placing raised net proceeds of £4,406,000.
On 29 August 2013 the number of Ordinary shares was increased to 447,357,841 following the exercise of warrants over 1,000,000 Ordinary 1p shares. The shares rank pari passu with existing Ordinary shares. The issue of new shares raised net proceeds of £50,000.
On 22 November 2013, the acquisition of MuOx Limited was effected by way of a share for share exchange at a fully paid up price of 9.38p per share. As a result the number of Ordinary shares was increased by 35,408,845 new Ordinary 1p shares. The shares rank pari passu with existing Ordinary shares. As part of the transaction warrants over a further 7,081,771 Ordinary Shares were issued at an issue price of 1p. These warrants can be exercised on achievement of key preclinical and clinical development milestones within a predetermined time period.
As part of an equity placing in April 2012, warrants over 3,540,884 Ordinary 1p shares were issued to Nplus1 Singer Capital Markets Limited (formerly Singer Capital Markets Limited), the Company's nominated adviser and joint-broker at the time, at an issue price of 3p. The warrants can be exercised in whole or in part at any time prior to 24 April 2016.
4. Post balance sheet events
A General Meeting of shareholders, held on 28 February 2014, approved the placing of 338,461,540 new Ordinary 1p shares at an issue price of 6.5p per share. The shares rank pari passu with existing Ordinary shares. The equity placing raised net proceeds of approximately £20.7 million. Following completion of the placing the number of Ordinary shares in issue was 821,228,226.