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

Summit Therapeutics Reports Financial Results and Operational Progress for the Second Quarter and Six Months Ended 31 July 2019

  • Reported Additional Positive Phase 2 Data Showing Ridinilazole Improved Quality of Life and Microbiome Preservation Compared to Standard of Care
  • Appointed Key Marketing Hires Focused on Potential US Commercialisation for Ridinilazole
  • Conference Call Today at 1:00pm BST / 8:00am EDT

Oxford, UK, and Cambridge, MA, US, 11 October 2019 - Summit Therapeutics plc (NASDAQ:SMMT, AIM: SUMM)) today reports its financial results and provides an update on its operational progress for the second quarter and six months ended 31 July 2019.

"It has been a quarter of strong progress across the clinical, scientific and commercial functions as we focus on our key mission of bringing to market our precision antibiotic, ridinilazole, as a potential new front-line treatment for patients with CDI," said Glyn Edwards, Chief Executive Officer of Summit. "With our landmark designed Phase 3 clinical trials for ridinilazole continuing on schedule, we have taken steps to secure a bright future for Summit as a leader in antibiotic innovation through the appointment of key hires to support the potential commercialisation of this new class antibiotic. Their experience in leading successful antibiotic launches, combined with the compelling clinical and microbiome data generated to date gives us confidence that, if approved, ridinilazole will be well positioned to become the treatment of choice for patients with C. difficile infection."

Ridinilazole for C. difficile Infection (‘CDI') Programme

  • Ri-CoDIFy Phase 3 landmark clinical trials aim to support adoption of the precision antibiotic ridinilazole as the new standard of care treatment for CDI by:
    1. showing superiority over the current standard of care, vancomycin, using a composite endpoint measuring sustained clinical response;
    2. generating health economic data to help support ridinilazole's commercial launch, if approved; and
    3. undertaking deep microbiome analysis that aims to show ridinilazole's preservation of the gut microbiome.
       
  • The Phase 3 clinical programme remains on track for expected reporting of top-line data in the second half of 2021. The trial initiation phase is progressing well with 17 countries open for enrolment (including 9 new countries in August and September), more than half of the 300 planned clinical trial sites opened, and patient enrolment at 73 and accelerating at the end of September 2019.
  • Reported new Phase 2 clinical trial data that showed ridinilazole improved patients' quality of life compared to vancomycin, including demonstrating statistically significant early and longer-term improvements in measurements of physical and mental health. Additional data highlighted mechanistic insights into how ridinilazole preserves the healthy function of the gut microbiome in patients with CDI. These new results were reported at the ID Week Conference held in Washington DC in early October 2019.
  • BARDA increased the total value of its award supporting the clinical and regulatory development of ridinilazole to up to $63.7 million in June 2019. Under this award, BARDA exercised a $9.6 million option related to patient enrolment and dosing in the Phase 3 clinical trials, bringing the total committed funding to $53.6 million.
  • Expanded commercial team to undertake preparatory activities to support Summit's strategy of commercialising ridinilazole in the United States, if approved.
    • Appointed Ms Anna Diaz Triola as Vice President, Marketing. Ms Triola has over 20 years industry experience, including working on the marketing strategy of the blockbuster antibiotic Cubicin® at Cubist.
    • Appointed Mr Kevin McDermott as Vice President, Market Access. Mr McDermott joins Summit from Insmed, where he led Global Market Access to Arikayce®, the first antibiotic to receive US FDA approval through the limited population pathway for antibacterial and antifungal drugs (‘LPAD').

Discuva Platform

SMT-571 for Gonorrhoea

  • Presented data at ASM Microbe and STI & HIV World Congress that showed our new class antibiotic SMT-571 had consistently high potency across over 200 clinically relevant strains of Neisseria gonorrhoeae, including numerous multi-drug resistant and extensively-drug resistant strains.
  • IND-enabling studies are ongoing, with the development of SMT-571 being supported by an award of up to $4.5 million from CARB-X.

DDS-04 for Enterobacteriaceae

  • DDS-04 compound series is a new class of antibiotics in lead optimisation that acts via the novel bacterial target LolCDE with the potential to treat infections caused by the Gram-negative bacteria, Enterobacteriaceae.
  • In vivo proof of concept has been demonstrated with a DDS-04 series compound in pneumonia, sepsis and urinary tract infection ('UTI'). UTI data were presented at ECCMID in April, and data from all three disease models were presented at the ASM/ESCMID Conference held in September.

Financial Highlights

  • Cash and cash equivalents at 31 July 2019 of £20.9 million compared to £26.9 million at 31 January 2019.
  • Loss for the three months ended 31 July 2019 of £5.2 million compared to a profit of £26.6 million for the three months ended 31 July 2018. The profit recorded in the three months ended 31 July 2018 was driven by an accelerated release of deferred revenues related to a former licence agreement.

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

Conference Call and Webcast Information
Summit will host a conference call and webcast to review the financial results for the second quarter and six months ended 31 July 2019 today at 1:00pm BST / 8:00am EDT. To participate in the conference call, please dial +44 (0)844 5718 892 (UK and international participants) or +1 631 510 7495 (US local number) and use the confirmation code 4281539. Investors may also access a live audio 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
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 Enterobacteriaceae and are using our proprietary Discuva Platform to expand our pipeline. For more information, visit www.summitplc.com and follow us on Twitter @summitplc.

For more information:

Summit
Glyn Edwards / Richard Pye (UK office)
Michelle Avery (US office)
Tel: +44 (0)1235 443 951
  +1 617 225 4455
   
Cairn Financial Advisers LLP (Nominated Adviser)
Liam Murray / Tony Rawlinson / Ludovico Lazzaretti
Tel: +44 (0)20 7213 0880
   
N+1 Singer (Joint Broker)
Aubrey Powell / Jen Boorer, Corporate Finance
Tom Salvesen, Corporate Broking
Tel: +44 (0)20 7496 3000
   
Bryan Garnier & Co Limited (Joint Broker)
Phil Walker / Dominic Wilson
Tel: +44 (0)20 7332 2500
   
MSL Group (US)
Erin Anthoine
Tel: +1 781 684 6652
  summit@mslgroup.com
   
Consilium Strategic Communications (UK)
Mary-Jane Elliott / Sue Stuart / 
Sukaina Virji / Lindsey Neville
Tel: +44 (0)20 3709 5700
   summit@consilium-comms.com

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 preclinical studies and clinical trials and the results of such studies and 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 2019. 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

Other Operating Income

Other operating income was £4.1 million for the three months ended 31 July 2019, as compared to £2.7 million for the three months ended 31 July 2018. Other operating income was £9.0 million for the six months ended 31 July 2019, as compared to £6.2 million for the six months ended 31 July 2018. These increases resulted primarily from the recognition of operating income from Summit's funding contract with BARDA for the development of ridinilazole, which was £3.5 million for the three months ended 31 July 2019 as compared to £2.0 million for the three months ended 31 July 2018 and £8.1 million for the six months ended 31 July 2019 as compared to £5.3 million for the six months ended 31 July 2018. To date, an aggregate of £23.0 million ($30.1 million) of the total committed BARDA funding of $53.6 million has been recognised.

The Group also recognised operating income related to the Group's CARB-X award supporting the development of SMT-571 for the treatment of gonorrhoea of £0.1 million during the three months ended 31 July 2019 as compared to £0.2 million for the three months ended 31 July 2018 and £0.4 million during the six months ended 31 July 2019 as compared to £0.3 million for the six months ended 31 July 2018.

Revenue

Revenue was £0.1 million for the three months ended 31 July 2019 compared to £38.0 million for the three months ended 31 July 2018. Revenue was £0.4 million for the six months ended 31 July 2019 compared to £41.8 million for the six months ended 31 July 2018.

Revenue of £0.1 million recognised during the three months ended 31 July 2019 and £0.2 million recognised during the six months ended 31 July 2019 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 in December 2017 for the exclusive right to commercialise ridinilazole in specified Latin American and Caribbean countries.

The decreases in revenue recognised are principally due to the reduction in revenue related to the Sarepta licence and collaboration agreement following the Group's decision to discontinue development of ezutromid in June 2018. Revenue relating to the cost-share arrangement under the Sarepta agreement recognised during the three months ended 31 July 2019 amounted to £nil and during the six months ended 31 July 2019 amounted to £0.1 million, as compared to total revenues relating to the upfront payment, development milestone payment and cost-share arrangement recognised during the three months ended 31 July 2018 of £37.8 million and during the six months ended 31 July 2018 of £41.3 million. Effective as of August 2019, the agreement with Sarepta has been terminated with no material ongoing obligations for either party.

Operating Expenses

Research and Development Expenses

Research and development expenses decreased by £0.7 million to £9.2 million for the three months ended 31 July 2019 from £9.9 million for the three months ended 31 July 2018. Research and development expenses decreased by £3.9 million to £17.5 million for the six months ended 31 July 2019 from £21.4 million for the six months ended 31 July 2018. These decreases reflect decreases in both Duchenne muscular dystrophy ('DMD') clinical programme costs, as a result of the discontinuation of the development of ezutromid in June 2018, and research and development related staffing costs, offset by increased CDI clinical programme costs.

Expenses related to the CDI programme increased by £4.1 million to £12.5 million for the six months ended 31 July 2019 from £8.4 million for the six months ended 31 July 2018. This increase primarily related to clinical operations and supply manufacturing activities related to the ongoing Ri-CoDIFy Phase 3 clinical trials of ridinilazole that commenced in February 2019.

Investment in the Group's preclinical antibiotic pipeline was £1.2 million for the six months ended 31 July 2019 compared to £0.4 million for the six months ended 31 July 2018. This increase primarily related to preclinical development activities for SMT-571 for the treatment of gonorrhoea and the DDS-04 series for the treatment of Enterobacteriaceae infections.

Expenses related to the DMD programme decreased to £0.2 million for the six months ended 31 July 2019 from £7.8 million for the six months ended 31 July 2018. The Group does not expect to incur further significant costs for this programme.

Other research and development expenses decreased by £1.2 million to £3.6 million during the six months ended 31 July 2019 as compared to £4.8 million during the six months ended 31 July 2018, which was driven by a decrease in staffing and facilities costs reflecting the implementation of cost-cutting measures following the decision to discontinue development of ezutromid in June 2018.

General and Administration Expenses

General and administration expenses decreased by £1.1 million to £1.2 million for the three months ended 31 July 2019 from £2.3 million for the three months ended 31 July 2018. General and administration expenses decreased by £1.8 million to £2.9 million for the six months ended 31 July 2019 from £4.7 million for the six months ended 31 July 2018. These decreases were driven by a reduction in staff and facilities related costs and legal and professional fees, as well as a net positive movement in exchange rate variances.

Finance Costs

Finance costs recognised during the three and six months ended 31 July 2019 relate to lease liability interest payable and the unwinding of the discount associated with provisions. Finance costs were £0.1 million for the three months ended 31 July 2019 compared to £0.2 million for the three months ended 31 July 2018. Finance costs were £0.1 million for the six months ended 31 July 2019 compared to £0.4 million for the six months ended 31 July 2018. This decrease relates to the cessation of the unwinding of the discount following the remeasurement of the financial liabilities on funding arrangements relating to DMD-related US not for profit organisations to £nil in June 2018.

Taxation

The income tax credit for the three months ended 31 July 2019 was £1.1 million as compared to a net income tax expense of £0.5 million for the three months ended 31 July 2018. The income tax credit for the six months ended 31 July 2019 was £1.9 million as compared to £0.5 million for the six months ended 31 July 2018. These changes in income tax during the three and six months ended 31 July 2019 as compared to during the three and six months ended 31 July 2018 were driven by the Group's de-recognition of its accrued UK research and development tax credit during the three months ended 31 July 2018, as it was not certain that the Group would have sufficient losses in the prior year to remain eligible to receive this research and development tax credit. The Group's current net tax credit for the periods reflects the accrued UK research and development tax credit based on management's estimate of the qualifying expenditure relating to research and development activities carried out by the Group, the taxes relating to the US operations and the release of deferred tax liabilities associated with the amortisation of intangible assets.

Losses

Loss before income tax was £6.2 million for the three months ended 31 July 2019 compared to a profit before income tax of £27.1 million for the three months ended 31 July 2018. Loss before income tax was £11.1 million for the six months ended 31 July 2019 compared to a profit before income tax of £20.3 million for the six months ended 31 July 2018.

Net loss for the three months ended 31 July 2019 was £5.2 million with a basic loss per share of 3 pence compared to a net profit of £26.6 million for the three months ended 31 July 2018 with a basic earnings per share of 32 pence. Net loss for the six months ended 31 July 2019 was £9.2 million with a basic loss per share of 6 pence compared to a net profit of £20.8 million for the six months ended 31 July 2018 with a basic earnings per share of 26 pence.

The profits recorded during the three and six months ended 31 July 2018 were 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.

Cash Flows

The Group had a net cash outflow of £7.3 million for the six months ended 31 July 2019 as compared to a net cash outflow of £3.8 million for the six months ended 31 July 2018.

Operating Activities
For the six months ended 31 July 2019, net cash used in operating activities was £6.9 million compared to £17.8 million for the six months ended 31 July 2018. This positive movement of £10.9 million was driven by an increase in cash received from licensing agreements and funding arrangements of £0.8 million, an increase in taxation cash inflows of £5.0 million due to the timing of receipt of the Group's research and development tax credits receivable on qualifying expenditure in respect of financial years ended 31 January 2017 and 2018, and a decrease in operating costs of £5.1 million as a result of the Group's decision to discontinue development of ezutromid.

Investing Activities
Net cash used in investing activities was £0.2 million for the six months ended 31 July 2019 as compared to £0.1 million for the six months ended 31 July 2018. Net cash used in investing activities for the six months ended 31 July 2019 includes amounts paid to acquire property, plant and equipment and intangible assets, offset by bank interest received on cash deposits.

Financing Activities
Net cash used in financing activities for the six months ended 31 July 2019 of £0.2 million primarily relates to lease liability repayments. Net cash generated from financing activities for the six months ended 31 July 2018 of £14.1 million was primarily driven by £14.1 million of proceeds, net of transaction costs, received following the Group's equity placing in March 2018.

Financial Position and Cash Runway Guidance

As at 31 July 2019, total cash and cash equivalents held were £20.9 million (31 January 2019: £26.9 million).

The Group believes that its existing cash and cash equivalents, anticipated payments from BARDA under its contract for the development of ridinilazole and anticipated payments from CARB-X under its contract for the development of its gonorrhoea antibiotic candidate, will be sufficient to enable the Group to fund its operating expenses and capital expenditure requirements through to at least 31 January 2020.

Glyn Edwards
Chief Executive Officer
11 October 2019

FINANCIAL STATEMENTS

Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the three months ended 31 July 2019

      Three months ended
 31 July 2019
  Three months ended
 31 July 2019
  Three months ended
 31 July 2018
              (Adjusted*)
  Note   $000s   £000s   £000s
               
Revenue     154     126     37,958  
               
Other operating income     5,053     4,135     2,699  
               
Operating expenses              
Research and development     (11,262 )   (9,216 )   (9,854 )
General and administration     (1,471 )   (1,204 )   (2,327 )
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