Summit Corporation PLC : Third Quarter Results for Nine Months Ended 31 October 2014

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February 02, 2015 02:00 ET

Summit Therapeutics plc

Summit Therapeutics plc

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Summit Corporation plc

('Summit' or the 'Company')

THIRD QUARTER RESULTS FOR THE NINE MONTHS ENDED 31 OCTOBER 2014

Oxford, U.K., 2 February 2015 - Summit (AIM: SUMM), the drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy ('DMD') and C. difficile infection ('CDI'), announces financial results for the third quarter and nine months ended 31 October 2014.  The Company has also separately announced today its proposed offering of American Depositary Shares in the United States, on the NASDAQ Global Market, to complement the continuing trading of Summit's ordinary shares on AIM.

DUCHENNE MUSCULAR DYSTROPHY PROGRAMME

Received regulatory and ethics committee approval to commence Phase 1b modified diet clinical trial of lead utrophin modulator SMT C1100; Top-line data expected to be reported in mid-2015

If successful, plan to initiate Phase 2 Open Label clinical trial in H2 2015 and placebo controlled Phase 2 clinical trial of SMT C1100 in early 2016

On-going development of second generation utrophin modulators with positive preclinical data unveiled at the 19th World Muscle Society Congress

C. DIFFICILE INFECTION PROGRAMME

Phase 2 Proof of Concept clinical trial on-going in U.S. and Canada

Enrolment and dosing of patients underway; top line data now expected in H2 2015

Positive preclinical efficacy data presented at the 54th ICAAC conference

OPERATIONAL HIGHLIGHTS

Proposed offering of American Depositary Shares in the United States and listing on the NASDAQ Global Market to complement the Company's current AIM listing, subject to shareholder approval (see separate announcement)

Proposed change of registered name to Summit Therapeutics plc

Appointment of Valerie Andrews as a Non-Executive Director

FINANCIAL HIGHLIGHTS

Cash and cash equivalents at 31 October 2014 of £15.0 million compared to £2.0 million at 31 January 2014

Operational expenditure in-line with expectation and reflects the increase in product development activities

Loss for the nine months ended 31 October 2014 of £8.3 million compared to £3.8 million for the nine months ended 31 October 2013

Mr Glyn Edwards, Chief Executive Officer of Summit commented, "Summit continues to make progress on a number of fronts.  The announcement today of a proposed listing on NASDAQ is intended to provide greater access to a wider set of healthcare investors, generate greater liquidity in the Company's shares, and increase awareness of Summit in geographies outside of the U.K., particularly in the United States.  As a complement to Summit's current quotation on AIM, the proposed NASDAQ listing and U.S. public offering are also expected to support the on-going development of our DMD and CDI programmes.  We expect to report top line data from patient clinical trials in each of these programmes during 2015."

Summit is an Oxford, U.K. based drug discovery and development company targeting high-value areas of unmet medical need including Duchenne Muscular Dystrophy and C. difficile infection.  Summit is quoted 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 Summit can be followed on Twitter (@summitplc).

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This press release does not constitute a prospectus and does not constitute or form, and will not form, part of any offer or invitation to sell or issue, or the solicitation of an offer to purchase or acquire, any of the ordinary shares or American Depositary Shares ('ADSs') referenced in this press release or any other securities in the United States of America or in any other jurisdiction.  Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the United States Securities Act of 1933, as amended (the 'Securities Act').  A registration statement relating to these securities has been filed with the SEC, but has not yet become effective.  These securities will not be sold, nor will offers to buy these securities be accepted, prior to the time the registration statement becomes effective.

Any public offering of securities to be made in the United States will be made by means of a prospectus.  Such prospectus will contain detailed information about the issuer and its management and financial statements.  When available, copies of the preliminary prospectus relating to the offering may be obtained from JMP Securities LLC, Prospectus Department, 600 Montgomery Street, 10th Floor, San Francisco, CA 94111, telephone: +1 (415) 835-8985; from Oppenheimer & Co. Inc., Syndicate Prospectus Department, 85 Broad Street, 26th Floor, New York, NY 10004, telephone: +1 (212) 667-8563 and from Needham & Company, LLC, Prospectus Department, 445 Park Avenue, 4th floor, New York, NY 10022, telephone: +1 (800) 903-3268.

Forward Looking Statements

This announcement contains 'forward-looking statements', including, but not limited to, statements about the discovery, development and commercialisation of programme assets and our proposed U.S. public offering and NASDAQ listing. 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.

THIRD QUARTER RESULTS FOR THE NINE MONTHS ENDED 31 OCTOBER 2014

Summit is focused on the development of novel medicines for the genetic disease Duchenne muscular dystrophy ('DMD') and the infectious disease Clostridium difficile infection ('CDI').  The DMD programme is based on utrophin modulation, an approach to treating DMD that is independent of the underlying mutations in the dystrophin gene that cause the disease.  Summit is a leader in the field of utrophin modulation and the Company believes utrophin modulation has the potential to treat the entire population of DMD patients.  Summit is also developing an earlier stage pipeline of second and future generation utrophin modulators for the treatment of DMD.  The Company's lead CDI product candidate is SMT19969, a small molecule antibiotic which is designed to selectively target C. difficile bacteria without causing collateral damage to the gut flora, and thereby reduce CDI recurrence rates, the key clinical issue in this disease.

Duchenne Muscular Dystrophy Programme

Lead Utrophin Modulator: SMT C1100

Summit is developing small molecule, orally administered utrophin modulators for the treatment of DMD.  The lead utrophin modulator is SMT C1100 which is currently being evaluated in patient clinical trials.  In December 2014, the Company received approval from the regulatory and ethics committee to initiate a Phase 1b clinical trial of SMT C1100 in DMD patients.  This new trial aims to increase the blood plasma levels of SMT C1100 by providing patients with specific dietary guidance intended to improve drug absorption.  The trial will also evaluate the potential impact that SMT C1100 is having on enzyme markers of muscle health.  Top-line data from the Phase 1b modified diet trial are expected to be reported in mid-2015.

If the Phase 1b is successful, Summit plans to initiate a Phase 2 open label trial in DMD patients designed to evaluate the longer-term effects of SMT C1100 on muscle health, function and safety.  The Company plans to seek regulatory approval for the Phase 2 open label trial in parallel to conducting the Phase 1b modified diet trial in an effort to minimise the time between the two studies.  Summit also plans to conduct a larger, multinational, placebo controlled Phase 2 trial of SMT C1100 that will include sites in the United States and Europe.  It is expected that this trial will be initiated in early 2016.

Second and Future Generation Utrophin Modulators

Summit is also developing a series of second and future generation utrophin modulators.  At the 19th World Muscle Society Congress held in October, new preclinical data were unveiled on the second generation molecules in development that demonstrated these small molecules had a positive benefit on utrophin protein production and muscle health.  The Company plans to identify a second generation candidate during H1 2015 for preclinical development.

C. difficile Infection Programme

The novel antibiotic SMT19969 for the treatment of CDI is currently being evaluated in a Phase 2 clinical trial.  This Phase 2 trial, named CoDIFy, is a double blind, randomised, active control trial evaluating the efficacy of SMT19969 against the current standard of care, the antibiotic vancomycin.  The trial is being conducted in the U.S. and Canada and enrolment and dosing of patients into this study is on-going.  Top-line results for the trial are now expected to be reported in H2 2015.

In addition to the Phase 2 study in North America, Summit is preparing to initiate an exploratory, open-label Phase 2 clinical trial that will evaluate SMT19969 against the recently launched antibiotic fidaxomicin.  It is expected that top-line results from this trial will be reported in H1 2016.

Positive preclinical efficacy data was presented at the 54th ICAAC Conference that further highlighted the potential SMT19969 has to be a new and differentiated antibiotic for the treatment of CDI.

As reported in a separate announcement issued today, Summit has filed a registration statement with the United States Securities and Exchange Commission (the 'SEC') for a proposed offering of American Depositary Shares ('ADSs') in the United States and a listing of the ADSs on the NASDAQ Global Market ('NASDAQ').  The Company's ordinary shares will continue to be admitted to trading on the AIM market of the London Stock Exchange.  The proposed offering of ADSs, together with existing resources, are intended to support the Company's development plans for its DMD and CDI programmes.  This includes funding the clinical development of the lead utrophin modulator SMT C1100 for DMD, development of second and future generation utrophin modulators for DMD, and the clinical development of the novel antibiotic SMT19969 for CDI.

The Directors believe that the United States represents one of the most important pharmaceutical markets for the development of these programmes, and it also has a large number of specialist healthcare investors.  To date the Company has had limited exposure to the U.S. capital markets and the Directors believe that a listing of ADSs will both provide greater access to U.S. investors, and also allow the Company and its shareholders to benefit from the additional liquidity of its shares that a listing on NASDAQ should generate.

The Company is also proposing a change of its registered name from Summit Corporation plc to Summit Therapeutics plc.  This change would directly reference the Company's area of business and is intended to increase the marketability of the Company amongst specialist healthcare investors and improve the visibility of the Company within the wider pharmaceutical and biotechnology industry.  It would also mirror the name of the Company's U.S. subsidiary, Summit Therapeutics Inc.

The Company will require shareholder approval to undertake the above actions and this will be sought at a General Meeting of shareholders, the details of which will be announced shortly.

Separately, Ms Valerie Andrews was appointed to the Board as Non-Executive Director in September 2014.  Ms Andrews has a broad range of commercial and legal skills from a career in the healthcare and life sciences industry that included most recently serving as the General Counsel for the NASDAQ listed company Vertex Pharmaceuticals Inc.  The addition of Ms Andrews to the Board supports the continued growth of the Company.

Comparison of Nine Month Periods Ended 31 October 2014 and 2013

Other Operating Income

Other operating income increased by £0.2 million to £1.6 million during the nine month period ended 31 October 2014 from £1.4 million during the nine month period ended 31 October 2013. This net increase reflects:

a £0.5 million increase in government grant income primarily associated with funding received from Innovate U.K. as part of an up to £2.4 million grant award to support the development of SMT C1100 for the treatment of DMD; and

a £0.3 million decrease in income recognised from the Wellcome Trust to £0.8 million for the nine month period ended 31 October 2014 from £1.1 million for the nine month period ended 31 October 2013. The decrease resulted from a lower contribution rate ascribed to Phase 2 activities as compared to Phase 1 activities under the terms of the funding agreement.

Research and Development Expenses

Research and development expenses increased by £3.2 million to £7.6 million for the nine month period ended 31 October 2014 from £4.4 million for the nine month period ended 31 October 2013.  The £3.2 million increase included:

£1.9 million in respect  to the DMD programme which includes £0.5 million related to the initial Phase 1b clinical trial in DMD patients and £0.5 million related to research associated with the second generation utrophin modulator programme and the strategic alliance with the University of Oxford;

£0.8 million in respect to the C. difficile programme due to costs incurred related to the ongoing Phase 2 clinical trial; and

£0.5 million in respect to other research and development costs which was driven by an increase in staffing costs.

General and Administration Expenses

General and administration expenses increased by £1.8 million to £3.1 million for the nine month period ended 31 October 2014 from £1.3 million for the nine month period ended 31 October 2013. This increase included the following:

a £0.7 million provision for milestone payments owed to two U.S. DMD patient groups as part of funding agreements entered into with these groups;

an increase in staff related costs of £0.4 million;

an increase of £0.4 million in share based payment expense related to share based awards made to two of our executives in lieu of cash bonuses in December 2013 that vested in full during the period;

a £0.2 million increase in legal and professional expenses; and

an increase in travel related expenses of £0.1 million.

Operating Activities

Net cash outflow from operating activities increased by £4.2 million to £7.6 million for the nine month period ended 31 October 2014 compared to £3.4 million for the nine month period ended 31 October 2013. This increase was due to a £4.0 million increase in research and development expenses and an increase in general and administration expenses of £1.0 million, offset by a decrease in working capital requirements of £0.8 million.

Investing Activities

Net cash inflow for the nine month periods ended 31 October 2014 and 2013 includes the net amount of bank interest received on cash deposits less amounts paid to acquire property and equipment.

Financing Activities

We received £20.5 million (net of expenses) from the issue of equity securities during the nine month period ended 31 October 2014 and £4.4 million (net of expenses) from the issue of equity securities during the nine month period ended 31 October 2013.

CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (unaudited)

As at 31 October 2014 and 31 January 2014

The Group initially recorded the provisional amounts of the fair values of identifiable assets acquired and liabilities assumed in the financial statements for the year ended 31 January 2014 since it had not completed the business combination accounting associated with the acquisition of MuOx Limited. Subsequent to the year end, the Group completed its assessment of the fair values of identifiable assets acquired and liabilities assumed which resulted in certain measurement period adjustments to reflect new information obtained about facts and circumstances that were in existence at the acquisition date. The Group has retrospectively adjusted the fair values of identifiable assets acquired and liabilities assumed and has updated the comparative information shown above.

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

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (unaudited)

For the nine months ended 31 October 2014 and 2013

(a)   As discussed in Note 1, 'Basis of accounting' the Group reclassified £835,000 (nine months ended 31 October 2013: £1,136,000) from revenue to other operating income. This change had no effect on the Group's operating loss or loss for the period.

(b)   The Group has reclassified costs previously included on the face of the Unaudited Consolidated Interim Statement of Comprehensive Income in respect of depreciation and amortisation of £24,000 (nine months ended 31 October 2013: £19,000) and the share-based payment charge of £701,000 (nine months ended 31 October 2013: £170,000) to the 'General and administration' and 'Research and development' expense lines as appropriate.

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

CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (unaudited)

For the nine months ended 31 October 2014 and 2013

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

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (unaudited)

For the nine months ended 31 October 2014 and 2013

Nine months ended 31 October 2014

Nine months ended 31 October 2013

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

NOTES TO THE FINANCIAL STATEMENTS (unaudited)

For the nine months ended 31 October 2013 and 2014

1. Basis of accounting

The unaudited consolidated interim financial statements of Summit Corporation plc and its subsidiaries (the 'Company' or the 'Group') for the nine months ended 31 October 2014 have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU including those applicable to accounting periods ending 31 January 2015 and the accounting policies set out in Summit's consolidated financial statements. They do not include all the statements required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at 31 January 2014.  The Group's unaudited interim financial statements do not comply with all the disclosures in IAS 34 'Interim Financial Reporting.'