Summit Therapeutics Inc 6-K, filed Jun 2, 2020
Summit Therapeutics Inc. (SMMT)
6-K
2020-06-02
For: 2020-03-31
View Original
Added on
April 09, 2026
About this 6-K
Summit Therapeutics Inc filed this 6-K on June 2, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of June, 2020
Commission File Number 001-36866
SUMMIT THERAPEUTICS PLC
(Translation of registrant’s name into English)
136a Eastern Avenue
Milton Park, Abingdon
Oxfordshire OX14 4SB
United Kingdom
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
FORM 20-F x FORM 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
YES ¨ NO x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
On June 2, 2020 Summit Therapeutics plc (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2020 and operational progress. The related press release is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
The unaudited condensed consolidated interim financial statements of the Company and its subsidiaries for the three months ended March 31, 2020 are attached hereto as Exhibit 99.2. Exhibit 99.2 and Exhibit 101 to this Report on Form 6-K are hereby incorporated by reference into the Company’s Registration Statement on Form F-3 (File No. 333-232074).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUMMIT THERAPEUTICS PLC | ||
By: | /s/ Robert Duggan | |
Robert Duggan | ||
Chief Executive Officer | ||
Date: June 2, 2020
EXHIBIT INDEX
Exhibit Number | Description | |
Press release dated June 2, 2020 | ||
Unaudited Condensed Consolidated Interim Financial Statements | ||
101.INS | XBRL Taxonomy Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
Summit Therapeutics plc
(‘Summit’, the ‘Company’ or the ‘Group’)
Summit Therapeutics Reports Financial Results and Operational Progress for the First Quarter and Three Months Ended March 31, 2020
Oxford, UK, and Cambridge, MA, US, June 2, 2020 - Summit Therapeutics plc (NASDAQ: SMMT) today reports its financial results and provides an update on its operational conditions for the first quarter and three months ended March 31, 2020.
Ridinilazole for C. difficile Infection (‘CDI’)
• | As of May 31, 2020, the Company had enrolled a total of 291 patients into its Phase 3 Ri-CoDIFy clinical trials. Below is a table outlining the enrollment statistics by calendar quarter and for this past April and May since the opening of the trials in February 2019. |
Quarter | Number of patients enrolled | Cumulative Patients Enrolled | ||
Q1 2019 | 9 | 9 | ||
Q2 2019 | 21 | 30 | ||
Q3 2019 | 43 | 73 | ||
Q4 2019 | 78 | 151 | ||
Q1 2020 | 101 | 252 | ||
April 2020 | 16 | 268 | ||
May 2020 | 23 | 291 | ||
• | Due to the uncertainties surrounding COVID-19, Summit Therapeutics is withdrawing public commentary on the timing of completion of the Phase 3 Ri-CoDIFy clinical trials. The Company will be updating stakeholders quarterly as to enrollment status. |
• | The Ri-CoDIFy clinical trials aim to support registration of the precision antibiotic ridinilazole in the US and other territories resulting in its intended adoption as a first-line treatment for CDI by: |
◦ | testing for superiority over the current standard of care, vancomycin, in the primary endpoint of sustained clinical response at 30 days after treatment has ended; |
◦ | generating health economic data to support ridinilazole's commercial launch, when as and if approved by regulatory authorities; and |
◦ | undertaking microbiome analysis that aims to show ridinilazole’s impact on the gut microbiome. |
• | BARDA is supporting the Phase 3 clinical and regulatory development of ridinilazole with a financial award of potential funding of up to $72.5 million. As of March 31, 2020, an aggregate of $42.4 million had been received. |
Discuva Platform
Enterobacteriaceae
• | DDS-04 compound series is a new class of precision 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. |
Gonorrhoea
• | DDS-01 compound series is a new class of precision antibiotics in lead optimization against Neisseria gonorrhoeae, and is supported by an award of up to $5.7 million from CARB-X. |
Corporate Highlights
• | Mr. Robert W. Duggan was appointed as Chief Executive Officer, Dr. Elaine Stracker was appointed Interim Chief Operating Officer and Dr. Ventzislav Stefanov was appointed Executive Vice President and President of Discuva, the Company's discovery engine employing 14 people, in April 2020. Mr. Glyn Edwards stepped down as Chief Executive Officer in April 2020, and he remains on the board as a Non-Executive Director. |
• | Dr. David Powell was promoted to Chief Scientific Officer and Ms. Divya Chari was appointed as Head of Global Clinical Operations in March 2020. Ms. Laura Trespidi was promoted to SVP, CMC and Supply Chain in February 2020. |
COVID-19
• | In light of the ongoing COVID-19 pandemic, Summit's employees continue to work remotely, enabling the majority of day to day business operations to continue. Summit's own laboratory facilities have begun to reopen to resume work on key projects; site access by staff is being monitored closely and is limited to ensure the safety of Summit researchers. There continues to be a negative impact on patient enrollment into the Ri-CoDIFy clinical trials. |
Financial Highlights
• | Cash and cash equivalents at March 31, 2020, of $55.3 million (£44.4 million) compared to $60.3 million (£48.4 million) at December 31, 2019. |
• | Loss for the three months ended March 31, 2020, of $6.1 million (£4.9 million) compared to a loss of $6.9 million (£5.3 million) for the three months ended March 31, 2019. Excluding the impact of exchange rate changes, the loss for the three months ended March 31, 2020, would be $9.3 million (£7.5 million) compared to a loss of $6.2 million (£4.7 million) for the three months ended March 31, 2019. |
About C. difficile Infection
Clostridioides difficile, or C. difficile, infection (CDI) is a bacterial infection of the colon that produces toxins causing inflammation of the colon and severe diarrhea. CDI can also result in more serious disease complications, including pseudomembranous colitis, bowel perforation, toxic megacolon and sepsis. CDI represents a serious healthcare issue in hospitals, long-term care homes and in the wider community. Summit estimates there are over one million cases of CDI each year in the United States and Europe, based on an epidemiology report on CDI that was published in 2015 by Decision Resources, a healthcare research and consulting company. Recurrence rates of up to 25% have been reported following treatment with the current standard of care, vancomycin. The vicious cycle of recurrence continues further, with patients who have one recurrence being at increased risk for another. The Healthcare Cost and Utilization Project, a family of databases developed through a federal-state-industry partnership, sponsored by the Agency for Healthcare Research and Quality of the US Department of Health and Human Services, reported an approximate 3.5-fold increase in hospital stays associated with CDI between 2000 and 2008. The economic impact of CDI is significant. A study published in 2016 in BMC Infectious Diseases estimated that the total costs attributable to the management of CDI were approximately $6.3 billion per year.
About Enterobacteriaceae
Enterobacteriaceae are a family of bacteria responsible for severe and often deadly infections. They account
for a significant number of cases across a number of conditions including bloodstream infections, urinary tract infections and hospital-acquired pneumonias. Summit estimates that there are more than one million infections in the United States annually caused by Enterobacteriaceae across these three conditions based on data published in 2018 in the Journal of Antimicrobial Chemotherapy, 2016 in the Journal of Molecular Science, 2014 in the National Healthcare Safety Network, 2014 and 2018 in the New England Journal of Medicine, 2015 in Nature Reviews Microbiology, 2012 in World Journal of Urology and 2014 in PLOS One. Mechanisms of antibiotic resistance to Enterobacteriaceae are listed as both urgent and serious threats by the CDC.
About Gonorrhea
There is an urgent unmet need for the development of new antibiotics against gonorrhea, which is a sexually transmitted infection caused by an overgrowth of the bacteria Neisseria gonorrhoeae (N. gonorrhoeae). N. gonorrhoeae can cause infection of the genitals, throat, and eyes. Untreated infections may spread to the rest of the body, especially the joints, and in women may cause pelvic inflammatory disease and possible infertility. It is estimated by the WHO that there are approximately 78 million new cases of gonorrhea globally per year. N gonorrhoeae has consistently developed resistance to each class of antibiotics recommended for the treatment of gonorrhea infections, and there is now only one treatment that is recommended by the CDC, a combination of the cephalosporin antibiotic ceftriaxone and the macrolide antibiotic azithromycin. The WHO ranks gonorrhea as a “high” priority for research and development while the CDC states that additional treatment options are urgently needed.
About Summit Therapeutics
Summit Therapeutics, led by its Discuva Platform, the Company's discovery engine, is a leader in antibiotic innovation. Our new mechanism antibiotics are designed to become the patient-friendly new era standard of care for those suffering from infectious disease, subject to regulatory approvals, and create value for payors and healthcare providers. In the present time, we are developing new mechanism antibiotics to treat infections caused by C. difficile, Enterobacteriaceae and N. gonorrhoeae 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 on the Company's Discuva Platform, visit https://www.summitplc,com/our-science/discuva-platform.
For more information:
Contacts Summit Press Office | investors@summitplc.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 commercialization 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, the impact of the COVID-19 pandemic 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 the 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 preclinical studies and clinical 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, legal, regulatory, political and economic risks arising from or relating to global public health crises that reduce economic activity (including the recent coronavirus COVID-19 outbreak) and the enrollment in and completion of clinical trials, 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 Transition Report on Form 20-F for the eleven months ended December 31, 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.
The financial information in the Company’s financial statements has been prepared assuming the Company will continue on a going concern basis. Based on management's forecasts, the Company's existing cash and cash equivalents, anticipated payments from BARDA under its contract for the development of ridinilazole, anticipated payments from CARB-X under its contract for the development of its gonorrhea antibiotic program, and anticipated milestone payments from its license and commercialization agreement with Eurofarma are expected to be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements through January 31, 2021. The Company will need to raise additional funding in order to support, beyond this date, its planned research and development efforts, its preparatory commercialization related activities should ridinilazole receive marketing approval, as well as to support activities associated with operating as a public company in the United States. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition, and may cast and raise significant doubt on the Company’s ability to continue as a going concern.
FINANCIAL STATEMENTS
Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the three months ended March 31, 2020
Three months ended March 31, 2020 | Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||||||
Note | $000s | £000s | £000s | |||||||
Revenue | 315 | 253 | 375 | |||||||
Other operating income | 5,096 | 4,092 | 4,574 | |||||||
Operating expenses | ||||||||||
Research and development | (12,143 | ) | (9,750 | ) | (8,693 | ) | ||||
General and administration | (651 | ) | (523 | ) | (2,367 | ) | ||||
Total operating expenses | (12,794 | ) | (10,273 | ) | (11,060 | ) | ||||
Operating (loss) | (7,383 | ) | (5,928 | ) | (6,111 | ) | ||||
Finance income | 1 | 1 | 2 | |||||||
Finance costs | (65 | ) | (52 | ) | (60 | ) | ||||
(Loss) before income tax | (7,447 | ) | (5,979 | ) | (6,169 | ) | ||||
Income tax | 1,298 | 1,042 | 831 | |||||||
(Loss) for the period | (6,149 | ) | (4,937 | ) | (5,338 | ) | ||||
Other comprehensive (loss) / income | ||||||||||
Items that may be reclassified subsequently to profit or loss | ||||||||||
Exchange differences on translating foreign operations | 16 | 13 | (6 | ) | ||||||
Total comprehensive (loss) for the period | (6,133 | ) | (4,924 | ) | (5,344 | ) | ||||
Basic and diluted (loss) per ordinary share from operations | (2) cents | (1) pence | (3) pence | |||||||
Condensed Consolidated Statement of Financial Position (unaudited)
As at March 31, 2020
March 31, 2020 | March 31, 2020 | December 31, 2019 | ||||||||
$000s | £000s | £000s | ||||||||
ASSETS | ||||||||||
Non-current assets | ||||||||||
Goodwill | 2,259 | 1,814 | 1,814 | |||||||
Intangible assets | 12,292 | 9,870 | 9,950 | |||||||
Property, plant and equipment | 1,305 | 1,048 | 1,167 | |||||||
15,856 | 12,732 | 12,931 | ||||||||
Current assets | ||||||||||
Trade and other receivables | 12,179 | 9,780 | 8,116 | |||||||
Current tax receivable | 6,080 | 4,882 | 3,659 | |||||||
Cash and cash equivalents | 55,296 | 44,400 | 48,417 | |||||||
73,555 | 59,062 | 60,192 | ||||||||
Total assets | 89,411 | 71,794 | 73,123 | |||||||
LIABILITIES | ||||||||||
Non-current liabilities | ||||||||||
Lease liabilities | (374 | ) | (300 | ) | (320 | ) | ||||
Deferred revenue | (1,039 | ) | (834 | ) | (374 | ) | ||||
Provisions for other liabilities and charges | (2,633 | ) | (2,114 | ) | (2,050 | ) | ||||
Deferred tax liability | (2,127 | ) | (1,708 | ) | (1,560 | ) | ||||
(6,173 | ) | (4,956 | ) | (4,304 | ) | |||||
Current liabilities | ||||||||||
Trade and other payables | (12,645 | ) | (10,154 | ) | (8,020 | ) | ||||
Lease liabilities | (418 | ) | (336 | ) | (358 | ) | ||||
Deferred revenue | (2,156 | ) | (1,731 | ) | (1,136 | ) | ||||
Contingent consideration | (100 | ) | (80 | ) | (80 | ) | ||||
(15,319 | ) | (12,301 | ) | (9,594 | ) | |||||
Total liabilities | (21,492 | ) | (17,257 | ) | (13,898 | ) | ||||
Net assets | 67,919 | 54,537 | 59,225 | |||||||
EQUITY | ||||||||||
Share capital | 4,187 | 3,362 | 3,359 | |||||||
Share premium account | 160,794 | 129,110 | 129,110 | |||||||
Share-based payment reserve | 1,825 | 1,465 | 1,299 | |||||||
Merger reserve | 3,770 | 3,027 | 3,027 | |||||||
Special reserve | 24,899 | 19,993 | 19,993 | |||||||
Currency translation reserve | 85 | 69 | 56 | |||||||
Accumulated losses reserve | (127,641 | ) | (102,489 | ) | (97,619 | ) | ||||
Total equity | 67,919 | 54,537 | 59,225 | |||||||
Condensed Consolidated Statement of Cash Flows (unaudited)
For the three months ended March 31, 2020
Three months ended March 31, 2020 | Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||||
$000s | £000s | £000s | |||||||
Cash flows from operating activities | |||||||||
Loss before income tax | (7,447 | ) | (5,979 | ) | (6,169 | ) | |||
(7,447 | ) | (5,979 | ) | (6,169 | ) | ||||
Adjusted for: | |||||||||
Loss on recognition of contingent consideration payable | — | — | (2 | ) | |||||
Finance income | (1 | ) | (1 | ) | (2 | ) | |||
Finance costs | 65 | 52 | 60 | ||||||
Foreign exchange (gain) / loss | (3,429 | ) | (2,753 | ) | 691 | ||||
Depreciation | 178 | 143 | 150 | ||||||
Amortization of intangible fixed assets | 259 | 208 | 207 | ||||||
Loss on disposal of assets | — | — | 26 | ||||||
Share-based payment | 290 | 233 | 260 | ||||||
Adjusted loss from operations before changes in working capital | (10,085 | ) | (8,097 | ) | (4,779 | ) | |||
Increase in prepayments and other receivables | (1,537 | ) | (1,235 | ) | (30 | ) | |||
Increase / (decrease) in deferred revenue | 1,315 | 1,055 | (1,025 | ) | |||||
Increase / (decrease) in trade and other payables | 1,967 | 1,579 | (2,270 | ) | |||||
Cash used in operations | (8,340 | ) | (6,698 | ) | (8,104 | ) | |||
Contingent consideration paid | — | — | 2 | ||||||
Taxation (paid) / received | (5 | ) | (4 | ) | 1 | ||||
Net cash used in operating activities | (8,345 | ) | (6,702 | ) | (8,101 | ) | |||
Investing activities | |||||||||
Purchase of property, plant and equipment | (30 | ) | (24 | ) | (64 | ) | |||
Purchase of intangible assets | (159 | ) | (128 | ) | — | ||||
Interest received | 1 | 1 | 2 | ||||||
Net cash used in investing activities | (188 | ) | (151 | ) | (62 | ) | |||
Financing activities | |||||||||
Proceeds from issue of share capital | — | — | 19,648 | ||||||
Transaction costs on share capital issued | — | — | (455 | ) | |||||
Proceeds from exercise of share options | 4 | 3 | — | ||||||
Repayment of lease liabilities | (51 | ) | (42 | ) | (80 | ) | |||
Repayment of lease interest | (7 | ) | (6 | ) | (9 | ) | |||
Net cash (used in) / generated from financing activities | (54 | ) | (45 | ) | 19,104 | ||||
(Decrease) / increase in cash and cash equivalents | (8,587 | ) | (6,898 | ) | 10,941 | ||||
Effect of exchange rates in cash and cash equivalents | 3,584 | 2,881 | (617 | ) | |||||
Cash and cash equivalents at beginning of the period | 60,299 | 48,417 | 9,521 | ||||||
Cash and cash equivalents at end of the period | 55,296 | 44,400 | 19,845 | ||||||
Condensed Consolidated Statement of Changes in Equity (unaudited)
Three months ended March 31, 2020
Group | Share capital £000s | Share premium account £000s | Share-based payment reserve £000s | Merger reserve £000s | Special reserve £000s | Currency translation reserve £000s | Accumulated losses reserve £000s | Total £000s | ||||||||||||||||
At January 1, 2020 | 3,359 | 129,110 | 1,299 | 3,027 | 19,993 | 56 | (97,619 | ) | 59,225 | |||||||||||||||
Loss for the period | — | — | — | — | — | — | (4,937 | ) | (4,937 | ) | ||||||||||||||
Currency translation adjustment | — | — | — | — | — | 13 | — | 13 | ||||||||||||||||
Total comprehensive loss for the period | — | — | — | — | — | 13 | (4,937 | ) | (4,924 | ) | ||||||||||||||
Share options exercised | 3 | — | — | — | — | — | — | 3 | ||||||||||||||||
Equity based compensation expense | — | — | 233 | — | — | — | — | 233 | ||||||||||||||||
Share-based payment reserve transfer | — | — | (67 | ) | — | — | — | 67 | — | |||||||||||||||
At March 31, 2020 | 3,362 | 129,110 | 1,465 | 3,027 | 19,993 | 69 | (102,489 | ) | 54,537 | |||||||||||||||
Year ended December 31, 2019
Group | Share capital £000s | Share premium account £000s | Share-based payment reserve £000s | Merger reserve £000s | Special reserve £000s | Currency translation reserve £000s | Accumulated losses reserve £000s | Total £000s | ||||||||||||||||
At January 1, 2019 | 823 | 74,394 | 1,119 | 3,027 | 19,993 | 65 | (74,217 | ) | 25,204 | |||||||||||||||
Profit for the year | — | — | — | — | — | — | (23,904 | ) | (23,904 | ) | ||||||||||||||
Currency translation adjustment | — | — | — | — | — | (9 | ) | — | (9 | ) | ||||||||||||||
Total comprehensive profit for the period | — | — | — | — | — | (9 | ) | (23,904 | ) | (23,913 | ) | |||||||||||||
New share capital issued | 2,535 | 55,872 | — | — | — | — | — | 58,407 | ||||||||||||||||
Transaction costs on share capital issued | — | (1,156 | ) | — | — | — | — | — | (1,156 | ) | ||||||||||||||
Share options exercised | 1 | — | — | — | — | — | 1 | |||||||||||||||||
Equity based compensation expense | — | — | 682 | — | — | — | — | 682 | ||||||||||||||||
Share-based payment reserve transfer | — | — | (502 | ) | — | — | — | 502 | — | |||||||||||||||
At December 31, 2019 | 3,359 | 129,110 | 1,299 | 3,027 | 19,993 | 56 | (97,619 | ) | 59,225 | |||||||||||||||
Three months ended March 31, 2019
Group | Share capital £000s | Share premium account £000s | Share-based payment reserve £000s | Merger reserve £000s | Special reserve £000s | Currency translation reserve £000s | Accumulated losses reserve £000s | Total £000s | ||||||||||||||||
At January 1, 2019 | 823 | 74,394 | 1,119 | 3,027 | 19,993 | 65 | (74,217 | ) | 25,204 | |||||||||||||||
Loss for the period | — | — | — | — | — | — | (5,338 | ) | (5,338 | ) | ||||||||||||||
Currency translation adjustment | — | — | — | — | — | (6 | ) | — | (6 | ) | ||||||||||||||
Total comprehensive profit for the period | — | — | — | — | — | (6 | ) | (5,338 | ) | (5,344 | ) | |||||||||||||
New share capital issued | 781 | 18,867 | — | — | — | — | — | 19,648 | ||||||||||||||||
Transaction costs on share capital issued | — | (456 | ) | — | — | — | — | — | (456 | ) | ||||||||||||||
Equity based compensation expense | — | — | 260 | — | — | — | — | 260 | ||||||||||||||||
Share-based payment reserve transfer | (418 | ) | 418 | — | ||||||||||||||||||||
At March 31, 2019 | 1,604 | 92,805 | 961 | 3,027 | 19,993 | 59 | (79,137 | ) | 39,312 | |||||||||||||||
Summit Therapeutics plc
Unaudited Condensed Consolidated Interim Financial Statements
For the three months ended March 31, 2020 and March 31, 2019
1
Unaudited Condensed Consolidated Interim Statement of Financial Position
As at March 31, 2020 and December 31, 2019
As at March 31, 2020 and December 31, 2019
March 31, 2020 | December 31, 2019 | |||||
Note | £000s | £000s | ||||
ASSETS | ||||||
Non-current assets | ||||||
Goodwill | 1,814 | 1,814 | ||||
Intangible assets | 9,870 | 9,950 | ||||
Property, plant and equipment | 1,048 | 1,167 | ||||
12,732 | 12,931 | |||||
Current assets | ||||||
Trade and other receivables | 9,780 | 8,116 | ||||
Current tax receivable | 4,882 | 3,659 | ||||
Cash and cash equivalents | 44,400 | 48,417 | ||||
59,062 | 60,192 | |||||
Total assets | 71,794 | 73,123 | ||||
LIABILITIES | ||||||
Non-current liabilities | ||||||
Deferred revenue | (834 | ) | (374 | ) | ||
Lease liabilities | (300 | ) | (320 | ) | ||
Provisions for other liabilities and charges | 9 | (2,114 | ) | (2,050 | ) | |
Deferred tax liability | (1,708 | ) | (1,560 | ) | ||
(4,956 | ) | (4,304 | ) | |||
Current liabilities | ||||||
Trade and other payables | (10,154 | ) | (8,020 | ) | ||
Lease liabilities | (336 | ) | (358 | ) | ||
Deferred revenue and income | 4,5 | (1,731 | ) | (1,136 | ) | |
Contingent consideration | (80 | ) | (80 | ) | ||
(12,301 | ) | (9,594 | ) | |||
Total liabilities | (17,257 | ) | (13,898 | ) | ||
Net assets | 54,537 | 59,225 | ||||
EQUITY | ||||||
Share capital | 3,362 | 3,359 | ||||
Share premium account | 129,110 | 129,110 | ||||
Share-based payment reserve | 10 | 1,465 | 1,299 | |||
Merger reserve | 3,027 | 3,027 | ||||
Special reserve | 19,993 | 19,993 | ||||
Currency translation reserve | 69 | 56 | ||||
Accumulated losses reserve | (102,489 | ) | (97,619 | ) | ||
Total equity | 54,537 | 59,225 | ||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
2
Unaudited Condensed Consolidated Interim Statement of Comprehensive Income
For the three months ended March 31, 2020 and 2019
For the three months ended March 31, 2020 and 2019
Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||||
Note | £000s | £000s | |||||
Revenue | 4 | 253 | 375 | ||||
Other operating income | 5 | 4,092 | 4,574 | ||||
Operating expenses | |||||||
Research and development | (9,750 | ) | (8,693 | ) | |||
General and administration | (523 | ) | (2,367 | ) | |||
Total operating expenses | (10,273 | ) | (11,060 | ) | |||
Operating loss | (5,928 | ) | (6,111 | ) | |||
Finance income | 1 | 2 | |||||
Finance costs | (52 | ) | (60 | ) | |||
Loss before income tax | (5,979 | ) | (6,169 | ) | |||
Income tax | 8 | 1,042 | 831 | ||||
Loss for the period | (4,937 | ) | (5,338 | ) | |||
Other comprehensive loss | |||||||
Items that may be reclassified subsequently to profit or loss | |||||||
Exchange differences on translating foreign operations | 13 | (6 | ) | ||||
Total comprehensive loss for the period | (4,924 | ) | (5,344 | ) | |||
Basic and diluted loss per ordinary share from operations | 3 | (1 | ) | p | (3 | ) | p |
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
3
Unaudited Condensed Consolidated Interim Statement of Cash Flows
For the three months ended March 31, 2020 and 2019
For the three months ended March 31, 2020 and 2019
Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||
£000s | £000s | |||||
Cash flows from operating activities | ||||||
(Loss) before income tax | (5,979 | ) | (6,169 | ) | ||
Adjusted for: | ||||||
Loss on recognition of contingent consideration payable | — | (2 | ) | |||
Finance income | (1 | ) | (2 | ) | ||
Finance costs | 52 | 60 | ||||
Foreign exchange (gain) / loss | (2,753 | ) | 691 | |||
Depreciation | 143 | 150 | ||||
Amortization of intangible fixed assets | 208 | 207 | ||||
Loss on disposal of assets | — | 26 | ||||
Share-based payment and warrant expense | 233 | 260 | ||||
Adjusted (loss) from operations before changes in working capital | (8,097 | ) | (4,779 | ) | ||
Increase in trade and other receivables | (1,235 | ) | (30 | ) | ||
Increase/ (decrease) in deferred revenue | 1,055 | (1,025 | ) | |||
Increase / (decrease) in trade and other payables | 1,579 | (2,270 | ) | |||
Cash used in operations | (6,698 | ) | (8,104 | ) | ||
Contingent consideration paid | — | 2 | ||||
Taxation (paid) / received | (4 | ) | 1 | |||
Net cash used in operating activities | (6,702 | ) | (8,101 | ) | ||
Investing activities | ||||||
Purchase of property, plant and equipment | (24 | ) | (64 | ) | ||
Purchase of intangible assets | (128 | ) | — | |||
Interest received | 1 | 2 | ||||
Net cash used in investing activities | (151 | ) | (62 | ) | ||
Financing activities | ||||||
Proceeds from issue of share capital | — | 19,648 | ||||
Transaction costs on share capital issued | — | (455 | ) | |||
Proceeds from exercise of share options | 3 | — | ||||
Repayment of lease liabilities | (42 | ) | (80 | ) | ||
Repayment of lease interest | (6 | ) | (9 | ) | ||
Net cash (used in) / generated from financing activities | (45 | ) | 19,104 | |||
(Decrease) / increase in cash and cash equivalents | (6,898 | ) | 10,941 | |||
Effect of exchange rates in cash and cash equivalents | 2,881 | (617 | ) | |||
Cash and cash equivalents at beginning of the period | 48,417 | 9,521 | ||||
Cash and cash equivalents at end of the period | 44,400 | 19,845 | ||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
4
Unaudited Condensed Consolidated Statement of Changes in Equity
For the three months ended March 31, 2020 and 2019
Three months ended March 31, 2020
Group | Share capital £000s | Share premium account £000s | Share-based payment reserve £000s | Merger reserve £000s | Special reserve £000s | Currency translation reserve £000s | Accumulated losses reserve £000s | Total £000s | ||||||||||||||||
At January 1, 2020 | 3,359 | 129,110 | 1,299 | 3,027 | 19,993 | 56 | (97,619 | ) | 59,225 | |||||||||||||||
Loss for the period | — | — | — | — | — | — | (4,937 | ) | (4,937 | ) | ||||||||||||||
Currency translation adjustment | — | — | — | — | — | 13 | — | 13 | ||||||||||||||||
Total comprehensive loss for the period | — | — | — | — | — | 13 | (4,937 | ) | (4,924 | ) | ||||||||||||||
Share options exercised | 3 | — | — | — | — | — | — | 3 | ||||||||||||||||
Equity based compensation expense | — | — | 233 | — | — | — | — | 233 | ||||||||||||||||
Share-based payment reserve transfer | — | — | (67 | ) | — | — | — | 67 | — | |||||||||||||||
At March 31, 2020 | 3,362 | 129,110 | 1,465 | 3,027 | 19,993 | 69 | (102,489 | ) | 54,537 | |||||||||||||||
Three months ended March 31, 2019
Group | Share capital £000s | Share premium account £000s | Share-based payment reserve £000s | Merger reserve £000s | Special reserve £000s | Currency translation reserve £000s | Accumulated losses reserve £000s | Total £000s | ||||||||||||||||
At January 1, 2019 | 823 | 74,394 | 1,119 | 3,027 | 19,993 | 65 | (74,217 | ) | 25,204 | |||||||||||||||
Loss for the period | — | — | — | — | — | — | (5,338 | ) | (5,338 | ) | ||||||||||||||
Currency translation adjustment | — | — | — | — | — | (6 | ) | — | (6 | ) | ||||||||||||||
Total comprehensive loss for the period | — | — | — | — | — | (6 | ) | (5,338 | ) | (5,344 | ) | |||||||||||||
New share capital issued | 781 | 18,867 | — | — | — | — | — | 19,648 | ||||||||||||||||
Transaction costs on share capital issued | — | (456 | ) | — | — | — | — | — | (456 | ) | ||||||||||||||
Equity based compensation expense | — | — | 260 | — | — | — | — | 260 | ||||||||||||||||
Share-based payment reserve transfer | — | — | (418 | ) | — | — | — | 418 | 0 | |||||||||||||||
At March 31, 2019 | 1,604 | 92,805 | 961 | 3,027 | 19,993 | 59 | (79,137 | ) | 39,312 | |||||||||||||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
5
1. Basis of Accounting
The unaudited condensed consolidated interim financial statements of Summit Therapeutics plc ('Summit' and the 'Company') and its subsidiaries (together, the 'Group') for the three months ended March 31, 2020 have been prepared in accordance with IAS 34 'Interim Financial Reporting', other International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretations Committee (‘IFRIC’) interpretations as issued by the International Accounting Standards Board and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS including those applicable to accounting periods ending December 31, 2020 and the accounting policies set out in Summit’s consolidated financial statements. There have been no changes to the accounting policies as contained in the annual consolidated financial statements as of and for the eleven months ended December 31, 2019.
In December 2019, the Board of Directors of Summit adopted a resolution to change the company’s fiscal year end from January 31 to December 31, commencing December 31, 2019. Therefore, the comparative quarter has changed to March 31.
These condensed consolidated interim financial statements do not include all information required for full statutory accounts within the meaning of section 434 of Companies Act 2006 and should be read in conjunction with the consolidated financial statements of the Group as at December 31, 2019 (the ‘2019 Accounts’). The 2019 Accounts, on which the Company’s auditors delivered an unqualified audit report will be delivered to the Registrar of Companies following the 2020 Annual General Meeting. The auditor’s report did not contain any statement under section 498 of the Companies Act 2006 but did contain a statement from the auditors drawing the shareholders’ attention to the Group’s need to raise additional capital as noted below.
These unaudited condensed consolidated interim financial statements were authorized for issue by the Board of Directors on June 2, 2020.
The interim financial statements have been prepared assuming the Group will continue on a going concern basis. Based on management's forecasts, the Group's 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 gonorrhea antibiotic program and anticipated milestone payments from its license and
commercialization agreement with Eurofarma are expected to be sufficient to enable the Group to fund its operating expenses and capital expenditure requirements through to at least January 31, 2021. The Group will need to raise additional funding in order to support, beyond this date, its planned research and development efforts, its preparatory commercialization related activities should ridinilazole receive marketing approval, as well as to support activities associated with operating as a public company in the United States.
The Group is evaluating various options to finance its cash needs through a combination of some, or all, of the following:
equity offerings, collaborations, strategic alliances, grants and clinical trial support from government entities, philanthropic, non-government and not-for-profit organizations and patient advocacy groups, debt financings, and marketing, distribution or licensing arrangements. While the Group believes that funds would be available in this manner before the end of January 2021, there can be no assurance that the Group will be able to generate funds, on terms acceptable to the Group, on a timely basis or at all, which would impact the Group’s ability to continue as a going concern. The failure of the Group to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Group’s business, results of operations and financial condition.
Should the Group be unable to raise additional funding, management has the ability to take mitigating action to fund its
operating expenses and capital expenditure requirements in relation to its clinical development activities for only a short
period beyond 12 months from the date of issuance of these financial statements. These circumstances represent a material uncertainty which may cast and raise significant doubt on the Group’s ability to continue as a going concern. The interim financial statements do not contain any adjustments that might result if the Group was unable to continue as a going concern
The Group’s activities and results are not exposed to any seasonality.
6
2. Critical accounting estimates and judgments
The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from those estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the eleven months ended December 31, 2019.
3. Loss per share calculation
The calculation of loss per share is based on the following data:
Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||||
000s | 000s | ||||||
Loss for the period | (£4,937 | ) | (£5,338 | ) | |||
Weighted average number of ordinary shares for basic loss per share | 336,089 | 153,427 | |||||
Weighted average number of ordinary shares for diluted loss per share | 336,089 | 153,427 | |||||
Basic loss per ordinary share from operations £ | (0.01 | ) | (0.03 | ) | |||
Diluted loss per ordinary share from operations £ | (0.01 | ) | (0.03 | ) | |||
Basic loss per ordinary share has been calculated by dividing the loss for the three months ended March 31, 2020 by the weighted average number of shares in issue during the three months ended March 31, 2020. Diluted loss per ordinary share has been calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Potentially dilutive ordinary shares represents the number of shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to share and warrant options in-the-money compared with the number of shares that would have been issued assuming the exercise of share and warrant options in-the-money.
IAS 33 ‘Earnings per Share’ requires the presentation of diluted earnings per share where a company could be called upon to issue shares that would decrease net profit or loss per share. As the Group reported net losses for the three months ended March 31, 2020, and for the three months ended March 31, 2019, the weighted average number of ordinary shares outstanding used to calculate the diluted loss per ordinary share is the same as that used to calculate the basic loss per ordinary share, as the exercise of share and warrant options would have the effect of reducing loss per ordinary share which is not dilutive.
7
4. Revenue
Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||||
Analysis of revenue by category | £000s | £000s | |||||
Licensing agreements | 253 | 375 | |||||
253 | 375 | ||||||
Eurofarma Laboratórios S.A.
On December 21, 2017, Summit announced it had entered into an exclusive license and commercialization agreement with Eurofarma Laboratórios S.A. ('Eurofarma'), pursuant to which the Group granted Eurofarma the exclusive right to commercialize ridinilazole in specified countries in South America, Central America and the Caribbean. The Group has retained commercialization rights in the rest of the world.
Under the terms of the license and commercialization agreement with Eurofarma, the Group received an upfront payment of $2.5 million (£1.9 million) from Eurofarma in December 2017. In February 2020, the Group reached the first enrollment milestone and received $1.0 million. The terms of the contract have been assessed under IFRS 15 'Revenue from contracts with customers' and currently only the upfront payment and the first enrollment milestone is included in the transaction price. The upfront payment and first enrollment milestone were initially reported as deferred revenue in the Consolidated Statement of Financial Position and are recognized as revenue over the development period. For the three months ended March 31, 2020 the Group recognized £0.25 million of revenue related to the upfront payment and the first enrollment milestone and £0.12 million for the three months ended March 31, 2019 which related to the upfront payment in accordance with the Group's revenue recognition policy.
In addition, the Group will be entitled to receive an additional $2.75 million in development milestones upon the achievement of staged patient enrollment targets in the licensed territory in one of the two planned Phase 3 clinical trials of ridinilazole. The Group is eligible to receive up to $21.5 million in development, commercial and sales milestones when cumulative net sales equal or exceed $100.0 million in the Eurofarma licensed territory. Each subsequent achievement of an additional $100.0 million in cumulative net sales will result in the Group receiving additional milestone payments, which, when combined with anticipated product supply transfer payments from Eurofarma paid to the Group in connection with a commercial supply agreement to be entered into between the two parties, will provide payments estimated to range from a mid-teens to high-teens percentage of cumulative net sales in the Eurofarma licensed territory. The Group estimates such product supply transfer payments from Eurofarma will range from a high single-digit to low double-digit percentage of cumulative net sales in the licensed territory.
Sarepta Therapeutics, Inc.
On October 4, 2016, Summit announced it had entered into an exclusive license and collaboration agreement with Sarepta Therapeutics, Inc. (‘Sarepta’). In June 2018, the Group announced the discontinuation of the development of ezutromid after its Phase 2 clinical trial called PhaseOut DMD did not meet its primary or secondary endpoints. As part of the license and collaboration agreement with Sarepta, the Group agreed to collaborate with Sarepta on the research and development of the licensed products pursuant to a joint development plan through a joint steering committee comprised of an equal number of representatives from each party. From January 1, 2018, the Group was responsible for 55% of the budgeted research and development costs related to the licensed products, and Sarepta was responsible for 45% of such costs. Any costs in excess of 110% of the budgeted amount were borne by the party that incurred such costs. This development cost share income is recognized as part of licensing agreements revenue as the Group acted as a principal in the scope of the research and development activities of the agreement. The Group recognized cost share income for both wind-down activities in relation to PhaseOut DMD and next and future generation utrophin modulation development activities of £nil during the three months ended March 31, 2020 and £0.26 million during the three months ended March 31, 2019. Effective as of August 2019, the agreement with Sarepta was terminated with no material ongoing obligations for either party.
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5. Other operating income
Analysis of other operating income by | Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||
category | £000s | £000s | ||||
Income recognized in respect of BARDA | 3,864 | 4,329 | ||||
Grant income | 84 | 241 | ||||
Research and development credit | 144 | 4 | ||||
4,092 | 4,574 | |||||
BARDA
In September 2017, the Group was awarded a funding contract from the Biomedical Advanced Research and Development Authority ('BARDA'), an agency of the US government's Department of Health and Human Services' Office of the Assistant Secretary for Preparedness and Response, to fund a specified portion of the clinical and regulatory development activities of ridinilazole for the treatment of C. difficile infection ('CDI').
Under the terms of this contract, the Group was initially eligible to receive base period funding of $32 million. In addition, the contract included three option work segments that, if exercised in full by BARDA, would increase the total federal government funding under the contract to approximately $62 million. In August 2018, BARDA exercised one of the option work segments worth $12 million. In June 2019, BARDA increased the total value of the funding contract to up to $63.7 million; at this time, BARDA also exercised a second of the option work segments worth $9.6 million to bring the total amount of committed BARDA funding to $53.6 million. In January 2020, BARDA increased its award by $8.8 million to bring the total amount of the funding contract to $72.5 million and the total amount of committed BARDA funding to $62.4 million. The remaining federal government funding is dependent on BARDA in its sole discretion exercising the final independent option work segment, upon the achievement by the Group of certain agreed-upon milestones for ridinilazole. As of March 31, 2020, an aggregate of £32.1 million ($42.4 million) of the total committed BARDA funding had been received.
During the three months ended March 31, 2020, the Group recognized funding income from BARDA of £3.9 million for the CDI program (three months ended March 31, 2019: £4.3 million).
CARB-X
In July 2018, the Group was granted a sub-award of up to $4.5 million from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program, or CARB-X. Under the CARB-X award, the Group received an initial $2.0 million in funding from CARB-X in July 2018. In February 2020, CARB-X increased the value of the initial funding by $1.2 million, which means the award for the initial period is now worth up to $3.2 million, with the total award worth up to $5.7 million. The remaining $2.5 million is split into two option segments, which may be exercised by CARB-X upon the achievement of certain development milestones. If exercised in full, this funding could support the development of a selected gonorrhea candidate through the end of a Phase 1 clinical trial.
During the three months ended March 31, 2020, the Group recognized grant income from CARB-X of £0.1 million (three months ended March 31, 2019: £0.2 million).
6. Financial instruments
The Group’s activities expose it to a variety of financial risks: foreign currency risk; interest rate risk; credit risk; and liquidity risk.
The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements. They should be read in conjunction with the Group’s consolidated financial statements for the eleven months ended December 31, 2019. There have been no changes in any risk management policies since the year end.
7. Segmental reporting
The Group’s activities are covered by one operating and reporting segment: Drug Development, as detailed more fully in the annual consolidated financial statements as of and for the eleven months ended December 31, 2019. There have been no changes to management’s assessment of the operating and reporting segments of the Group during the period.
9
8. Income tax
Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||
£000s | £000s | |||||
Current period research and development tax credit on qualifying expenditure | 1,233 | 836 | ||||
Tax expense related to the US operations | (43 | ) | (36 | ) | ||
Total current tax | 1,190 | 800 | ||||
Change in deferred tax rate | (179 | ) | — | |||
Release of temporary difference relating to intangible asset | 31 | 31 | ||||
Total deferred tax | (148 | ) | 31 | |||
Total tax credit for the period | 1,042 | 831 | ||||
The research and development tax credit is recognized based on management’s estimate of the qualifying expenditure relating to research and development activities carried out by the Group. The UK operations have estimated losses for the year and as such there is no accrued income tax for the period.
In the Spring Budget 2020, the Government announced that from April 1, 2020, the corporation tax rate in the U.K. would remain at 19% (rather than reducing to 17%, as previously enacted). This new law was substantively enacted on March 17, 2020. As a result, the Group recognized an additional £0.2 million of tax expense.
9. Provisions and contingencies
Provisions
Assumed contingent liabilities | Dilapidations | Royalties | Total | ||||||||
£000s | £000s | £000s | £000s | ||||||||
At January 1, 2020 | 1,855 | 150 | 45 | 2,050 | |||||||
Additions | — | — | 19 | 19 | |||||||
Unwinding of the discount factor | 45 | — | — | 45 | |||||||
At March 31, 2020 | 1,900 | 150 | 64 | 2,114 | |||||||
Assumed contingent liabilities | Dilapidations | Royalties | Total | ||||||||
£000s | £000s | £000s | £000s | ||||||||
At January 1, 2019 | 1,641 | 150 | 44 | 1,835 | |||||||
Additions | — | — | 1 | 1 | |||||||
Unwinding of the discount factor | 214 | — | — | 214 | |||||||
At December 31, 2019 | 1,855 | 150 | 45 | 2,050 | |||||||
Assumed contingent liability
On December 23, 2017, the Group acquired Discuva Limited ('Discuva'). As part of the acquisition, the Group assumed certain contingent liabilities as certain employees, former employees and former directors of Discuva are eligible for payments from Discuva based on specified development and clinical milestones related to proprietary product candidates developed under the Discuva Platform. The timing of these potential payments is uncertain.
10
9. Provisions and contingencies (continued)
On the date of acquisition, the fair value of the assumed contingent liability was estimated using the expected value of the payments. The assumed contingent liabilities are subsequently measured at amortized cost using discounted cash flow models which calculate the risk adjusted net present values of estimated potential future cash flows of the payments. The assumed contingent liabilities are re-measured when there is a specific significant event that provides evidence of a significant change in the probability of successful development and clinical milestones being achieved.
The models will be updated for changes in the probability of successful development and clinical milestones being achieved and other associated assumptions with the discount factor to remain unchanged within the model. A discount factor of 13% has been used to discount the contingent liabilities back to net present value. This discount factor has been calculated using appropriate measures and rates which could have been obtained in the period that the contingent liabilities were assumed.
The value of the assumed contingent liability as at March 31, 2020 is £1.9 million (December 31, 2019: £1.9 million). The contingent liability has not been re-measured during the period. The table below describes the value of the
assumed contingent liabilities as at March 31, 2020, of £1.9 million compared to what the total value would be
following the presented variations to the underlying assumptions in the model:
March 31, 2020 £000 | ||
Estimated assumed contingent liabilities | 1,900 | |
1% lower discount rate | 1,973 | |
1% higher discount rate | 1,836 | |
10% lower probability of success | 1,675 | |
10% higher probability of success | 2,106 | |
Contingencies
In addition to those items provided for above, the Group also has the following contingencies:
University College London (novated from The School of Pharmacy, University of London)
The Group has agreed to pay the University College London a low single-digit share of all revenue, pre and post commercialization, received by the Group in respect of ridinilazole up to a maximum of £1.0 million in consideration of their role in the development of the initial compound series from which ridinilazole was later identified. Following the license and commercialization agreement entered into with Eurofarma Laboratórios S.A. ('Eurofarma'), an initial payment was made to University College London of £0.04 million. Upon reaching the first milestone on enrollment with Eurofarma, an additional payment was provided for as at the period end date.
Wellcome Trust
The provision in respect of royalties relates to the amounts due to the Wellcome Trust. Under the terms of the funding arrangement entered into in October 2017, the Wellcome Trust is entitled to a share of the cumulative net revenue that the Group or its affiliates receive from exploiting the exploitation intellectual property rights or award products. If Summit undertakes the commercialization of ridinilazole, the Wellcome Trust would be eligible to receive a low-single digit percentage share of net revenues. If a third-party undertakes the commercialization of ridinilazole, the Wellcome Trust would be eligible to receive a mid-single digit percentage share of net revenues received by Summit from sales by the third-party and a milestone payment of a low-single digit percentage of any cumulative pre-commercial payments received by Summit from third-party licensees. In both instances outlined above the Group would also be obligated to pay the Wellcome Trust a milestone of a specified amount if cumulative net revenue exceeds a specified amount. Following the license and commercialization agreement entered into with Eurofarma, an initial payment became due to the Wellcome Trust upon commercialization of ridinilazole. A second payment became due as a result of reaching the first milestone on enrollment with Eurofarma. The payment has been provided for by the Group as at the period end date and has been discounted back to net present value relative to the expected timing of the potential commercialization of ridinilazole.
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10. Share option scheme and restricted stock units
The movement in the number of share options is set out below:
Weighted average exercise price £ | Three months ended March 31, 2020 | Weighted average exercise price £ | Three months ended March 31, 2019 | ||||||||
Outstanding at January 1 | 0.27 | 23,224,188 | 0.35 | 9,168,396 | |||||||
Granted during the period | — | — | 0.28 | 11,396,000 | |||||||
Lapsed / surrendered during the period | 0.28 | (3,489,661 | ) | 1.52 | (145,445 | ) | |||||
Number of outstanding options | 0.27 | 19,734,527 | 0.31 | 20,418,951 | |||||||
The movement in the number of restricted stock units (‘RSUs’) granted in the form of a nominal-cost option is set out below:
Weighted average exercise price £ | Three months ended March 31, 2020 | Weighted average exercise price £ | Three months ended March 31, 2019 | ||||||||
Outstanding at January 1 | 0.01 | 692,306 | 0.01 | 814,256 | |||||||
Exercised during the period | 0.01 | (269,230 | ) | 0.01 | (104,877 | ) | |||||
Number of outstanding options | 0.01 | 423,076 | 0.01 | 709,379 | |||||||
The equity based compensation expense for the three months ended March 31, 2020 was £0.2 million (three months ended March 31, 2019: £0.3 million) which has been allocated to the Research and development and General and administration expenses lines of the Unaudited Condensed Consolidated Interim Statement of Comprehensive Income as follows:
Three months ended March 31, 2020 | Three months ended March 31, 2019 | ||||||
£000s | £000s | ||||||
Research and development | 66 | 45 | |||||
General and administration | 167 | 215 | |||||
233 | 260 | ||||||
11. Share capital
On January 27, 2020, 269,230 ordinary shares were issued following the exercise of RSUs. This exercise of RSUs raised net proceeds of £2,692.
The new ordinary shares issued in connection with the RSUs exercised rank pari passu with existing ordinary shares.
As of March 31, 2020, the number of ordinary shares in issue was 336,159,511.
12. Related-party transactions
The aggregate emoluments of the Directors of the Company are shown below.
Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||
£000s | £000s | |||||
Aggregate emoluments | 127 | 141 | ||||
Pension contributions | 7 | 6 | ||||
134 | 147 | |||||
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12. Related-party transactions (continued)
The aggregate emoluments of the Directors of the Company and key management are shown below.
Three months ended March 31, 2020 | Three months ended March 31, 2019 | |||||
£000s | £000s | |||||
Aggregate emoluments | 566 | 289 | ||||
Pension contributions | 40 | 16 | ||||
606 | 305 | |||||
Dr. Elaine Stracker, Interim Chief Operating Officer and an executive director is also the General Counsel and Senior Vice President for Corporate Development for Maky Zanganeh and Associates, Inc. (“MZA”). The Group has a consultancy agreement with MZA to provide support into clinical operation activities related to the ongoing global Phase 3 clinical trials of ridinilazole for the treatment of CDI, regulatory activities pertaining to a potential new drug application should the Phase 3 trials be successful and strategic planning support more generally for the ridinilazole program. The fees for such services under this consultancy agreement are $75,000 per month. In addition to such monthly fee, MZA were granted warrants over 16,793,660 Ordinary Shares with an exercise price of £0.221 each and which vest on a quarterly basis over three years from the date of grant, subject to MZA’s provision of consultancy services to the Group during such period. During the three months ended March 31, 2020, £176,000 ($225,000) of consultancy fees (three months ended March 31, 2019: nil) were incurred by the Group and a warrant expense of £169,000 was recognized (three months ended March 31, 2019: nil).
On February 7, 2020, MZA, Dr. Zanganeh, Dr. Stracker and the company entered into an assignment and assumption
agreement (the “Assignment and Assumption Agreement”). Pursuant to the Assignment and Assumption Agreement, MZA assigned a portion of the Consultant Warrant to each of Dr. Zanganeh and Dr. Stracker. Dr. Zanganeh assumed a warrant to acquire 14,694,453 ordinary shares and Dr. Stracker assumed a warrant to acquire 2,099,207 ordinary shares. Each of them has the right to exercise their respective portion of the Consultant Warrant in accordance with the terms and conditions of the MZA Warrant Agreement.
13