Summit Reports Financial Results for the Second Quarter Ended 31 July 2018 and Operational Progress

Summit Therapeutics plc

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

Summit Therapeutics Reports Financial Results for the Second Quarter and Half Year Ended 31 July 2018 and Operational Progress

Oxford, UK, and Cambridge, MA, US, 20 September 2018 - Summit Therapeutics plc (NASDAQ: SMMT, AIM: SUMM), a leader in new mechanism antibiotic innovation, today reports its financial results for the second quarter and half year ended 31 July 2018 and provides an update on operational progress.

“The world is in desperate need of new antibiotics, and we believe we can deliver with our new mechanism antibiotics covering the most urgent infectious disease threats and a platform that has the potential to continue to unveil novel targets and deliver optimised candidates for the clinic,” commented Mr Glyn Edwards, Chief Executive Officer of Summit. “Following the disappointing Phase 2 clinical trial results with our Duchenne muscular dystrophy programme, we believe we are able to capitalise on our established strengths in infectious diseases and focus on building a successful antibiotics company."

"We believe this can be accomplished by developing new mechanism antibiotics to show significant advantages over the current standards of care for a specific pathogen or infection,” added Mr Edwards. “This approach supports the appropriate use of antibiotics, which could significantly improve patient outcomes and ultimately reduce healthcare costs.”

Programme Highlights

Antibiotics-focused Strategy

Summit is focusing on developing its new mechanism antibiotics to become new standards of care

Decision follows discontinuation of ezutromid for treatment of Duchenne muscular dystrophy (‘DMD’) after ezutromid missed the primary and secondary endpoints in its Phase 2 proof of concept clinical trial, as announced in June 2018

Ridinilazole for C. difficile Infection (‘CDI’)

Phase 3 clinical trials of ridinilazole are on-track to start in Q1 2019

$12 million option exercised under existing BARDA contract to support development of ridinilazole, bringing total committed BARDA non-dilutive funding to $44 million

Publication in PLOS One of Phase 2 clinical data showing ridinilazole was highly preserving of the microbiome of CDI patients compared to patients treated with standard of care vancomycin

SMT-571 for Gonorrhoea

SMT-571 nominated to progress into IND-enabling studies for the treatment of N. gonorrhoeae infections

Up to $4.5 million of non-dilutive funding awarded by CARB-X to support the preclinical and Phase 1 clinical development of SMT-571

ESKAPE and Other Antibiotic Programmes

Power of Discuva Platform demonstrated with the identification of multiple new mechanism antibiotic research programmes

Novel targets against ESKAPE pathogens identified with Discuva Platform

Second series of new mechanism antibiotics discovered against second novel N. gonorrhoeae target

Operational Highlights

Cost-cutting measures implemented following the trial results from the Company’s Phase 2 clinical trial of ezutromid for DMD, including a 23% reduction in headcount

As part of the Company’s decision to focus on antibiotics development, Dr Barry Price and Professor Stephen Davies have today stepped down from the Board of Directors

Financial Highlights

Profit for the three months ended 31 July 2018 of £26.6 million compared to a loss of £3.3 million for the three months ended 31 July 2017. Profit in the current quarter was driven by the recognition of all deferred revenue related to the Sarepta licence and collaboration agreement following the discontinuation of ezutromid development

Cash and cash equivalents at 31 July 2018 of £17.1 million compared to £20.1 million at 31 January 2018

Summit provides new guidance on its cash runway which has been extended as a result of its cost cutting measures and business re-alignment focusing on development of antibiotics. The Company now expects that its existing cash and cash equivalents, along with the Company’s existing funding arrangements, will be sufficient to fund the Company’s operating expenses and capital expenditure requirements through 30 September 2019

Conference Call and Webcast Information

Summit will host a conference call and webcast to review the financial results for the second quarter and half year ended 31 July 2018 today at 1:00pm BST / 8:00am EDT. To participate in the conference call, please dial +44 (0)330 336 9127 (UK and international participants) or +1 929-477-0324 (US local number) and use the conference confirmation code 2035228. Investors may also access a live webcast of the call via the investors section of the Company’s website, www.summitplc.com. A replay of the webcast will be available shortly after the presentation finishes.

About Summit Therapeutics

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.

Antibiotics: New Science, New Philosophy, New Opportunity

Summit is building a new type of antibiotic company. Summit is starting with innovative science focussed on developing drugs that can truly make a difference in the lives of patients. From there, Summit aims to design clinical trials to show its antibiotic candidates have significant advantages over current standards of care and offer a compelling value proposition to payors. Through these collective efforts, Summit believes it can position its new mechanism antibiotics for commercial success.

This strategy is exemplified by ridinilazole, Summit’s lead antibiotic in development for the treatment of C. difficile infection ('CDI'). Ridinilazole has the potential to become the new front-line treatment for CDI and is expected to enter Phase 3 clinical trials in the first quarter of 2019. Behind ridinilazole, Summit is advancing a growing portfolio of earlier stage antibiotic programmes which have emerged from its proprietary Discuva Platform, including SMT-571 for the treatment of gonorrhoea and a programme focussed on the ESKAPE pathogens.

Summit’s antibiotic research and development activities have received significant funding support from third party organisations including BARDA, CARB-X, the Wellcome Trust and Innovate UK.

Ridinilazole: A Potential Front-Line Antibiotic to Combat C. difficile Infection

Ridinilazole is a novel-class, Phase 3-ready precision antibiotic in development for front-line treatment of CDI. The drug is designed to selectively target C. difficile bacteria without causing collateral damage to the gut microbiome, and therefore has the potential to be a front-line therapy that treats not only the initial CDI infection, but importantly reduces the rate of CDI recurrence.

CDI is a major healthcare threat with a significant unmet need. There are over one million cases of CDI in the US and Europe per year, resulting in about 29,000 deaths annually in the US alone. Mainstay CDI treatments are dominated by broad spectrum antibiotics, such as vancomycin. Initial treatment with vancomycin fails in approximately one-third of patients, driven by a high rate of patients having a recurrence of the disease within 30 days after treatment. This recurrence is caused by substantial disruption to the gut microbiome. Each recurrent episode of CDI is typically more severe than the prior episode and carries an increased risk of mortality. As such, reducing disease recurrence is the key clinical issue facing CDI.

Ridinilazole’s Phase 3 clinical trials have been designed to replicate the positive results from the Phase 2 proof of concept clinical trial in which ridinilazole demonstrated clinical and statistical superiority over vancomycin in sustained clinical response (‘SCR’). SCR is a combined endpoint that measures cure of the initial infection and whether patients have disease recurrence 30 days after completing treatment. The Phase 3 programme comprises two global clinical trials that will enrol approximately 700 patients each. The trials will be randomised and double blind with half of patients to be dosed with ridinilazole, and the other half with vancomycin. The design of the Phase 3 trials also includes various health economic outcome measures that are expected to support the commercialisation of ridinilazole. The two trials are expected to start in the first quarter of 2019 with top-line data expected to be reported in the second half of 2021.

The ongoing development of ridinilazole is being supported by a contract with BARDA that potentially provides up to $62 million in non-dilutive funding. To date, total committed BARDA funding under this contract is $44 million, including a $12 million option that was exercised by BARDA in August 2018.

SMT-571: Preclinical Antibiotic for the Treatment of Gonorrhoea

Gonorrhoea is recognised as an urgent bacterial threat by the US Centers for Disease Control (‘CDC’) and designated as a high priority pathogen by the World Health Organization (‘WHO’) due to the diminishing treatment arsenal for the disease. The WHO estimates there are approximately 78 million new cases of gonorrhoea globally each year. There is now only one treatment option recommended by the CDC for the treatment of gonorrhoea, a combination of two generic antibiotics. Resistance to this treatment option is growing, and alarmingly there are currently no other recommended antibiotics available.

Summit is developing SMT-571 as a new mechanism antibiotic for killing N. gonorrhoeae. Working by targeting cell division, SMT-571 has shown high potency for a range of N. gonorrhoeae strains in in vitro studies, including those that are multi-drug resistant. In September 2018, SMT-571 was nominated as a preclinical candidate for progression into investigational new drug (‘IND’) enabling studies. Summit expects to initiate a Phase 1 clinical trial of SMT-571 in the second half of 2019, with top-line data expected to be reported in the second half of 2020.

In July 2018, Summit was awarded up to $4.5 million in non-dilutive funding from CARB-X, a public-private partnership dedicated to accelerating antibacterial research and development to address the rising global threat of drug-resistant bacteria. The funding is supporting the preclinical and Phase 1 clinical development of SMT-571 if certain development milestones are met.

Discuva Platform: An Engine to Generate New Mechanism Antibiotics

The development of Summit’s pipeline of new mechanism antibiotics is underpinned by its proprietary Discuva Platform. From discovery through the selection of optimised clinical candidates, the Discuva Platform has the potential to deliver antibiotics with new mechanisms of action and a low likelihood of resistance development combined with targeted spectrum of activity. The Discuva Platform utilises proprietary libraries of a wide range of bacteria that can be used to generate new mechanism antibiotics against bacteria that are classified as urgent or high-risk threats by the CDC and WHO.

In September 2018, a new discovery programme targeting ESKAPE pathogens was unveiled. The ESKAPE pathogens (Enterococcus faecium, Staphylococcus aureus, Klebsiella pneumoniae, Acinetobacter baumannii, Pseudomonas aeruginosa, Enterobacter spp.) are a group of bacteria that represent a leading cause of hospital acquired infections around the world and are subject to increasing rates of resistance to existing antibiotic classes.

Second Novel Gonorrhoea Target

In June 2018, identification of a second novel target to kill N. gonorrhoeae distinct from the one targeted by SMT-571 was reported, along with the discovery of a promising new series of compounds that may have activity against this target. The development of this second series of compounds is supported in part by a grant from Innovate UK.

Roche Collaboration Further Validates Discuva Platform

In 2014, Roche and Summit’s subsidiary, Discuva Limited, entered into a collaboration using the Discuva Platform for the discovery and development of new antibiotic compounds. The joint research element of the collaboration concluded early 2018, and Roche is solely responsible for continuing development of any compound that was identified under the collaboration, with Summit eligible to receive from Roche milestones and royalty payments based on the successful development and commercialisation of any such compound.

Duchenne Muscular Dystrophy (DMD)

In June 2018, Summit discontinued the development of ezutromid, the Company’s lead utrophin modulator for the treatment of DMD. This decision was taken following the Phase 2 proof of concept clinical trial in patients with DMD not meeting its primary or secondary endpoints after 48-weeks of ezutromid treatment. Summit expects activities related to PhaseOut DMD to be substantially completed by year-end.

Operational and Board Changes

In July 2018 as a consequence of the discontinuation of ezutromid, the Company reduced its headcount by 17 employees, or approximately 23% of total headcount.

As part of the Company's business re-alignment to focus on the development of new mechanism antibiotics, Dr Barry Price and Professor Stephen Davies have today stepped down as Non-Executive Directors.  Dr Price and Professor Davies have both made significant contributions towards the development and growth of Summit since its formative years and they leave with the Company’s very best wishes for the future.

With the Company focussing on progressing ridinilazole through Phase 3 and towards potential commercialisation, and advancing its pipeline of earlier-stage antibiotics, the board will continue to assess its composition to ensure it is supporting the future development of the business.

Revenue was £38.0 million for the three months ended 31 July 2018 compared to £4.8 million for the three months ended 31 July 2017. Revenue was £41.8 million for the six months ended 31 July 2018 compared to £6.5 million for the six months ended 31 July 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 three months ended 31 July 2018 and the six months ended 31 July 2018 was driven by the recognition of all remaining deferred revenue related to the Sarepta licence and collaboration agreement during the three months ended 31 July 2018, due to the Group’s decision to discontinue development of ezutromid. This recognition of deferred revenues did not impact the Group's cash flows. Revenue during the six months ended 31 July 2018 included £23.6 million relating to the upfront payment of $40.0 million (£32.8 million) received from Sarepta in October 2016, as compared to £3.5 million recognised during the six months ended 31 July 2017. Revenue during the six months ended 31 July 2018 also included £12.4 million relating to the development milestone payment of $22.0 million (£17.2 million) received from Sarepta in May 2017, as compared to £3.0 million for the six months ended 31 July 2017. During the six months ended 31 July 2018, £5.3 million of revenue relating to development cost share income from Sarepta was recognised, as compared to £nil for the six months ended 31 July 2017.

The Group also recognised £0.1 million of revenue during the three months ended 31 July 2018 and £0.3 million of revenue during the six months ended 31 July 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 six months ended 31 July 2018, the Group recognised £0.2 million of revenue pursuant to a research collaboration agreement between the Group’s acquired 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 £2.7 million for the three months ended 31 July 2018 and £6.2 million for the six months ended 31 July 2018, as compared to £nil for both the three and six months ended 31 July 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 £2.0 million during the three months ended 31 July 2018 and £5.3 million during the six months ended 31 July 2018.

During the three and six months ended 31 July 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 the US not for profit organisations, which is further discussed in Note 6 – ‘Financial liabilities on funding arrangements.'

The Group also recognised £0.2 million of operating income during the three months ended 31 July 2018 and £0.3 million of operating income during the six months ended 31 July 2018 related to the Group's CARB-X and Innovate UK grants.

Research and Development Expenses

Research and development expenses increased by £2.9 million to £9.5 million for the three months ended 31 July 2018 from £6.6 million for the three months ended 31 July 2017. Research and development expenses increased by £9.1 million to £20.7 million for the six months ended 31 July 2018 from £11.6 million for the six months ended 31 July 2017. These increases reflected increased expenditure related to our DMD and CDI programmes, as well as our antibacterial research activities and research and development related staffing costs.

Investment in the DMD programme increased by £1.0 million to £7.8 million for the six months ended 31 July 2018 from £6.8 million for the six months ended 31 July 2017. This was driven by an increase in expenses associated with manufacturing costs for our clinical trials and research activities associated with our utrophin modulator programme. Costs associated with the CDI programme increased by £6.8 million to £8.4 million for the six months ended 31 July 2018 from £1.6 million for the six months ended 31 July 2017. This increase primarily related to manufacturing costs and other preparatory activities being conducted for the planned Phase 3 clinical trials of ridinilazole. Investment in antibacterial research activities was £0.4 million for the six months ended 31 July 2018 compared to £nil million for the six months ended 31 July 2017. Other research and development expenses increased by £0.8 million to £4.1 million during the six months ended 31 July 2018 as compared to £3.3 million during the six months ended 31 July 2017, which was driven by an increase in headcount within the CDI and antibacterial research teams.

General and Administration Expenses

General and administration expenses increased by £0.2 million to £2.7 million for the three months ended 31 July 2018 from £2.5 million for the three months ended 31 July 2017. General and administration expenses increased by £0.5 million to £5.4 million for the six months ended 31 July 2018 from £4.9 million for the six months ended 31 July 2017. These increases were driven by a net positive movement in exchange rate variances, offset by increased staff related costs, legal and professional fees and overhead and facility related costs.

Impairment of Goodwill and Intangible Assets

Due to the outcome of the ezutromid clinical trial, the Group announced it was discontinuing development of ezutromid. As a result, the Group recognised an impairment charge of £4.0 million relating to the intangible asset and goodwill associated with the acquisition of MuOx Limited. See Note 3 'Impairment of goodwill and intangible assets' for further details.

Finance income was £2.8 million for the three and six months ended 31 July 2018 and related primarily to the re-measurement of the Group’s financial liabilities on funding arrangements following the ezutromid clinical trial results. See Note 6 'Financial liabilities on funding arrangements' for further details. Finance income recognised in comparative periods relates to bank interest received.

Finance costs relate to the unwinding of the discount on financial liabilities on funding arrangements and provisions. Finance costs remained consistent at £0.1 million for the three months ended 31 July 2018 compared to £0.2 million for the three months ended 31 July 2017. Finance costs remained consistent at £0.3 million for the six months ended 31 July 2018 compared to £0.4 million for the six months ended 31 July 2017. Following the re-measurement of the financial liabilities on funding arrangements to £nil during the three months ended 31 July 2018, the Group no longer expects further financing costs in relation to the unwinding of the discount on financial liabilities on funding arrangements.

Income tax expense during the three months ended 31 July 2018 was £0.5 million as compared to an income tax credit of £1.3 million during the three months ended 31 July 2017. Income tax credit during the six months ended 31 July 2018 was £0.5 million as compared to an income tax credit of £2.5 million during the six months ended 31 July 2017. The changes in income tax during the three and six months ended 31 July 2018 as compared to during the three and six months ended 31 July 2017 were driven by the Group's de-recognition of its current year accrued UK research and development tax credit, as it is not certain that the Group will have sufficient losses in the year to remain eligible to receive this research and development tax credit. This movement was offset by the release of a deferred tax liability associated with the impairment charge discussed in Note 3 'Impairment of goodwill and intangible assets.'

The Group recorded a profit for both the three and six months ended 31 July 2018, primarily because of the recognition of all remaining amounts of deferred revenue related to the Sarepta agreement following the Group's decision to discontinue development of ezutromid.

Profit before income tax was £27.1 million for the three months ended 31 July 2018 compared to a loss before income tax of £4.6 million for the three months ended 31 July 2017. Profit before income tax was £20.4 million for the six months ended 31 July 2018 compared to a loss before income tax of £10.5 million for the six months ended 31 July 2017.

Profit for the three months ended 31 July 2018 was £26.6 million with a basic earnings per share of 32 pence compared to a loss of £3.3 million for the three months ended 31 July 2017 with a basic loss per share of 5 pence. Profit for the six months ended 31 July 2018 was £20.8 million with a basic earnings per share of 26 pence compared to a loss of £8.0 million for the six months ended 31 July 2017 with a basic loss per share of 13 pence.

The Group had a net cash outflow of £3.8 million for the six months ended 31 July 2018 compared to a net cash inflow of £1.2 million for the six months ended 31 July 2017.

Operating Activities

For the six months ended 31 July 2018, net cash used in operating activities was £18.0 million compared to net cash generated from operating activities of £1.5 million for the six months ended 31 July 2017. This negative movement of £19.5 million was driven by an increase in net operating costs and a net reduction in cash received from licensing agreements and funding arrangements.

Investing Activities

Net cash used in investing activities for the six months ended 31 July 2018 was £0.1 million compared to £0.4 million for the six months ended 31 July 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 six months ended 31 July 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 ('RSUs') and share options. During the six months ended 31 July 2017 the Group received proceeds of £0.03 million following the exercise of warrants and share options.

Financial Position and Cash Runway Guidance

As at 31 July 2018, total cash and cash equivalents held were £17.1 million (31 January 2018: £20.1 million).

We believe that our existing cash and cash equivalents, as well as the $44 million we have been awarded under our contract with BARDA for the development of ridinilazole, the cost-sharing arrangement under our licence and collaboration agreement with Sarepta, and funding from our grant from CARB-X for the development of gonorrhoea antibiotic candidates, 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 July 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 six months ended 31 July 2018