Home Page

Summit Therapeutics plc
(‘Summit’, the ‘Company’ or the ‘Group’)

Summit Therapeutics Reports Financial Results for the Third Quarter and Nine Months Ended 31 October 2018 and Operational Progress

• Continued Momentum in Building a Portfolio of Differentiated Antibiotics

Oxford, UK, and Cambridge, MA, US, 11 December 2018 - Summit Therapeutics plc (NASDAQ: SMMT, AIM: SUMM), a leader in new mechanism antibiotic innovation, today reports its financial results for the third quarter and nine months ended 31 October 2018 and provides an update on its operational progress.

“As we continue to build out our antibiotics portfolio, we are focusing on the development of differentiated new mechanism antibiotics which we have the potential to demonstrate clear advantages over current standards of care," said Mr Glyn Edwards, Chief Executive Officer of Summit. "The promise of two of our product candidates has been recognised through separate funding awards. Ridinilazole continues to garner support from the US government agency, BARDA, which committed a further $12M of the up to $62M award. We believe this Phase 3-ready precision antibiotic could significantly improve patient outcomes as a potential front-line treatment and reduce recurrences of C. difficile infection. We expect to initiate the Phase 3 clinical trials of ridinilazole in Q1 2019.

“We received non-dilutive funding from the public-private partnership CARB-X for SMT-571, our product candidate for the treatment of gonorrhoea. We selected SMT-571 as our clinical candidate in the third quarter of 2018 for its selectivity for and potency against N. gonorrhoeae, including multi-drug resistant strains. In addition, in the third quarter of 2018, we announced a programme targeting hospital-acquired infections caused by the ESKAPE pathogens. This programme further highlights the potential of our Discuva Platform to identify new mechanism antibiotics and to be a source for antibiotic innovation moving forward."

Programme Highlights

Ridinilazole for C. difficile Infection (‘CDI’)

• Phase 3 clinical trials of ridinilazole are on-track to start in Q1 2019.
• Design of the two global Phase 3 clinical trials presented at IDWeek conference. The trials will test for superiority of ridinilazole compared to the standard of care in the treatment of CDI. Endpoints include ridinilazole’s impact on reducing disease recurrence and in preserving the gut microbiome, as well as health economic outcomes measures that are intended to help support commercialisation efforts.
• $12 million option exercised by BARDA in August 2018 under existing contract to support clinical and regulatory development of ridinilazole, bringing total committed BARDA non-dilutive funding to $44 million.
• PLOS One publication highlighted microbiome-preserving activity of ridinilazole over standard of care in the CoDIFy Phase 2 clinical trial.

SMT-571 for Gonorrhoea

• SMT-571 nominated to progress into IND-enabling studies for the treatment of gonorrhoea. Preclinical data presented at various conferences during the period highlighted SMT-571 as a selective and potent antibiotic with characteristics that could support its front-line use.
• Up to $4.5 million of non-dilutive funding awarded by CARB-X in July 2018 to support the preclinical and Phase 1 clinical development of SMT-571.

ESKAPE Programme

• Novel targets against ESKAPE pathogens identified using the Discuva Platform.
• Discovery further highlights the power of Summit’s proprietary Discuva Platform as a potential source of new mechanism antibiotics to treat serious infectious diseases. 

Operational Highlights

• As previously announced, as part of the Company’s efforts to focus its activities on antibiotics development, Dr Barry Price and Professor Stephen Davies stepped down from the Board of Directors.

Financial Highlights

• Loss for the three months ended 31 October 2018 of £8.1 million compared to a loss of £0.9 million for the three months ended 31 October 2017. Loss for the current quarter was impacted by a non-cash charge related to the acceleration of share-based payment expense resulting from the surrender of share option awards.
• Cash and cash equivalents at 31 October 2018 of £13.0 million compared to £20.1 million at 31 January 2018.

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 ESKAPE pathogens and are using our proprietary Discuva Platform to expand our pipeline. For more information, visit www.summitplc.com and follow us on Twitter @summitplc.

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

For more information:

Forward Looking Statements
Any statements in this press release about the Company’s future expectations, plans and prospects, including but not limited to, 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 ability of BARDA or CARB-X to terminate our 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 clinical trials and the results of such trials, whether preliminary results from a clinical trial will be predictive of the final results of that trial or whether results of early clinical trials 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 2018. 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

Revenue

Revenue was £0.7 million for the three months ended 31 October 2018 compared to £2.6 million for the three months ended 31 October 2017. Revenue was £42.5 million for the nine months ended 31 October 2018 compared to £9.1 million for the nine months ended 31 October 2017.

Revenues in each of these periods relates primarily to the Group’s licence and collaboration agreement with Sarepta Therapeutics, Inc. (‘Sarepta’). The increase in revenues during the nine months ended 31 October 2018 was driven by the recognition of all remaining deferred 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 nine months ended 31 October 2018 relating to the licence and collaboration agreement amounted to £41.9 million. This recognition of deferred revenues did not impact the Group's cash flows. Revenues recognised during the three months ended 31 October 2018 included £0.6 million of revenue relating to development cost share income from Sarepta, which the Group continues to receive.

The Group also recognised £0.1 million of revenue during the three months ended 31 October 2018 and £0.4 million of revenue during the nine months ended 31 October 2018 related 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. During the nine months ended 31 October 2018, the Group also recognised £0.2 million of revenue pursuant to a research collaboration agreement between the Group’s subsidiary Discuva Limited and F. Hoffmann - La Roche Limited (‘Roche’). On 21 February 2018, the research services period under the Roche agreement ended.

Other Operating Income

Other operating income was £2.8 million for the three months ended 31 October 2018 and £9.0 million for the nine months ended 31 October 2018, as compared to £1.6 million for both the three and nine months ended 31 October 2017. These increases resulted primarily from the recognition of operating income from Summit’s funding contract with BARDA for the development of ridinilazole, which was £2.2 million during the three months ended 31 October 2018 and £7.5 million during the nine months ended 31 October 2018.

The Group also recognised operating income of £0.4 million during the three months ended 31 October 2018 and £0.7 million during the nine months ended 31 October 2018 related to the Group's CARB-X and Innovate UK awards, and £0.2 million during the three and nine months ended 31 October 2018 in respect of UK Research and Development Expenditure Credits.

During the nine months ended 31 October 2018, the Group recognised £0.5 million of operating income resulting from the release of the Group's financial liabilities on funding arrangements relating to Duchenne muscular dystrophy ('DMD')-related US not for profit organisations because of the Group's decision to discontinue the development of ezutromid.

Operating Expenses

Research and Development Expenses
Research and development expenses increased by £0.8 million to £8.2 million for the three months ended 31 October 2018 from £7.4 million for the three months ended 31 October 2017. Research and development expenses increased by £10.5 million to £29.6 million for the nine months ended 31 October 2018 from £19.1 million for the nine months ended 31 October 2017. These increases reflected increased expenditure related to the Group's CDI programme, antibiotic pipeline development activities, and research and development related staffing and facilities costs, offset by decreased expenditure related to the discontinued DMD programme.

Expenses related to the CDI programme increased by £9.4 million to £12.7 million for the nine months ended 31 October 2018 from £3.3 million for the nine months ended 31 October 2017. This increase primarily related to clinical trial preparatory activities and manufacturing activities related to the planned Phase 3 clinical trials of ridinilazole. Investment in the Group's antibiotic pipeline development activities was £1.1 million for the nine months ended 31 October 2018 compared to £nil for the nine months ended 31 October 2017.

Expenses related to the DMD programme decreased by £2.1 million to £8.6 million for the nine months ended 31 October 2018 from £10.7 million for the nine months ended 31 October 2017. This was driven by a decrease in clinical and manufacturing costs associated with ezutromid following its development being discontinued in June 2018, as well as a reduction in future generation utrophin modulation programme research activities.

Other research and development expenses increased by £2.1 million to £7.2 million during the nine months ended 31 October 2018 as compared to £5.1 million during the nine months ended 31 October 2017, which was driven by an increase in staff costs related to the CDI and antibiotic development teams and a non-cash charge related to the acceleration of share-based payment expense resulting from the surrender of share option awards. See Note 5 'Share option scheme and Restricted Stock Units' for further details on the surrendered share option awards.

General and Administration Expenses
General and administration expenses increased by £2.7 million to £4.7 million for the three months ended 31 October 2018 from £2.0 million for the three months ended 31 October 2017. General and administration expenses increased by £2.4 million to £9.3 million for the nine months ended 31 October 2018 from £6.9 million for the nine months ended 31 October 2017. These increases were driven by a non-cash charge for the acceleration of share-based payment expense resulting from the surrender of share option awards, a loss on recognition of contingent consideration payable relating to the acquisition of Discuva Limited and increases in staff related costs and legal and professional fees, offset by a net positive movement in exchange rate variances and decreases in overhead and facility related costs. See Note 5 'Share option scheme and Restricted Stock Units' for further details on the surrendered share option awards and Note 2 'Contingent consideration' for further details on the loss recognised on recognition of contingent consideration payable.

Impairment of Goodwill and Intangible Assets
As mentioned above, the results of the Phase 2 clinical trial of ezutromid in June 2018 led to the Group discontinuing development of ezutromid. As a result, the Group recognised an impairment charge during the nine months ended 31 October 2018 of £4.0 million relating to the intangible asset and goodwill associated with the acquisition of MuOx Limited.

Finance Income

Finance income was £nil for the three months ended 31 October 2018 and £2.8 million for the nine months ended 31 October 2018. This related primarily to the re-measurement of the Group’s financial liabilities on funding arrangements relating to DMD-related US not for profit organisations following the result of the Phase 2 clinical trial of ezutromid in June 2018. Finance income was £3.1 million for both the three and nine months ended 31 October 2017. This related primarily to the derecognition of the Group's financial liabilities on funding arrangements relating to the Wellcome Trust as part of the Group and the Wellcome Trust entering into an equity and revenue sharing agreement in October 2017.

Finance Costs

Finance costs recognised during the three and nine months ended 31 October 2018 relate to the unwinding of the discount associated with financial liabilities on funding arrangements and provisions. Finance costs were £0.1 million for the three months ended 31 October 2018 compared to £0.2 million for the three months ended 31 October 2017. Finance costs were £0.4 million for the nine months ended 31 October 2018 compared to £0.7 million for the nine months ended 31 October 2017. These decreases relate to a reduction in the unwinding of the discount following the re-measurement of the financial liabilities on funding arrangements to £nil in June 2018.

Taxation

The income tax credit for the three months ended 31 October 2018 was £1.3 million as compared to £1.5 million for the three months ended 31 October 2017. The income tax credit for the nine months ended 31 October 2018 was £1.7 million as compared to £4.0 million for the nine months ended 31 October 2017. These changes in income tax credit were driven by a reduction in the Group's current year accrued UK research and development tax credit, as it is not certain that there will be sufficient losses to surrender to be eligible to receive a full research and development tax credit due to the revenues recognised relating to the Sarepta licence and collaboration agreement. This movement was offset by the release of deferred tax liabilities associated with the impairment of goodwill and amortisation of intangible assets.

The Group's net corporation tax receivable includes research and development tax credits receivable on qualifying expenditure in respect of previous financial years. The Group estimates that it will receive these research and development tax credit payments in the next quarter.

Profit / (Losses)

Loss before income tax was £9.4 million for the three months ended 31 October 2018 compared to a loss before income tax of £2.3 million for the three months ended 31 October 2017. Profit before income tax was £11.0 million for the nine months ended 31 October 2018 compared to a loss before income tax of £12.9 million for the nine months ended 31 October 2017. The profit recorded for the nine months ended 31 October 2018 was primarily due to the recognition of all remaining deferred revenue related to the Sarepta agreement following the Group's decision to discontinue the development of ezutromid in June 2018. This recognition of deferred revenues did not impact the Group's cash flows.

Loss for the three months ended 31 October 2018 was £8.1 million with a basic loss per share of 10 pence compared to a loss of £0.9 million for the three months ended 31 October 2017 with a basic loss per share of 1 pence. Profit for the nine months ended 31 October 2018 was £12.7 million with a basic earnings per share of 16 pence compared to a loss of £8.9 million for the nine months ended 31 October 2017 with a basic loss per share of 14 pence.

Cash Flows

The Group had a net cash outflow of £8.2 million for the nine months ended 31 October 2018 compared to a net cash inflow of £4.6 million for the nine months ended 31 October 2017.

Operating Activities
For the nine months ended 31 October 2018, net cash used in operating activities was £22.4 million compared to net cash used in operating activities of £8.9 million for the nine months ended 31 October 2017. This negative movement of £13.5 million was primarily driven by an increase in operating costs of £13.1 million and a net reduction in cash received from licensing agreements and funding arrangements of £0.8 million, offset by a positive movement in taxation cash flows of £0.4 million.

Investing Activities
Net cash used in investing activities for the nine months ended 31 October 2018 was £0.1 million compared to £0.4 million for the nine months ended 31 October 2017. This represents amounts paid to acquire property, plant and equipment and intangible assets, net of bank interest received on cash deposits.

Financing Activities
Net cash generated from financing activities for the nine months ended 31 October 2018 of £14.2 million includes £14.1 million of proceeds, net of transaction costs, received following the Group’s equity placing on the AIM market of the London Stock Exchange in March 2018, and £0.1 million received following the exercise of Restricted Stock Units and share options. Net cash generated from financing activities for the nine months ended 31 October 2017 included £13.5 million of proceeds, net of transaction costs, received following the Company’s underwritten public equity offering in September 2017, and £0.4 million received following the exercise of warrants and share options.

Financial Position and Cash Runway Guidance

As at 31 October 2018, total cash and cash equivalents held were £13.0 million (31 January 2018: £20.1 million).

The Group believes that its existing cash and cash equivalents, anticipated payments from BARDA under its contract for the development of ridinilazole, the cost-sharing arrangement under its licence and collaboration agreement with Sarepta, 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 30 September 2019.

FINANCIAL STATEMENTS

Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the three months ended 31 October 2018

* See Note 1 - ‘Basis of Accounting - Adoption of IFRS 15 Revenue from contracts with customers’

Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the nine months ended 31 October 2018

			Nine months ended  31 October 2018			Nine months ended  31 October 2018			Nine months ended  31 October 2017
									(Adjusted*)
	Note		$000s			£000s			£000s
Revenue			54,320			42,507			9,112
Other operating income			11,474			8,979			1,574
Operating expenses
Research and development	5		(37,869	)		(29,634	)		(19,068	)
General and administration	2,5		(11,909	)		(9,319	)		(6,903	)
Impairment of goodwill and intangible assets			(5,094	)		(3,986	)		—
Total operating expenses			(54,872	)		(42,939	)		(25,971	)
Operating profit / (loss)			10,922			8,547			(15,285	)
Related companies: Summit Corporation plc
Copyright 2018 Nasdaq / GlobeNewswire	Back to overview list