TIDMSAR
RNS Number : 9927T
Sareum Holdings PLC
19 October 2017
(AIM: SAR) 19 October 2017
Sareum Holdings plc
("Sareum" or "the Company")
Final Results
Sareum Holdings plc (AIM: SAR), the specialist cancer drug
discovery and development company, announces its final results for
the year ended 30 June 2017.
Operational highlights
-- Lead cancer drug candidate SRA737 (formerly CCT245737), a
novel Chk1 inhibitor, licensed for clinical development and
commercialisation to NASDAQ-listed company Sierra Oncology, Inc. by
Sareum's co-investment partner, CRT Pioneer Fund (September
2016).
o Sareum is eligible to receive 27.5% of up to $328.5 million in
upfront, development and commercialisation milestone payments as
well as royalties on sales.
o An upfront payment of $7 million and a first milestone payment
of $2 million have already been received from Sierra Oncology
(September 2016 and January 2017, respectively).
-- Good progress reported by Sierra Oncology in the two ongoing
clinical studies with SRA737 as both a monotherapy and in
combination with chemotherapy in a range of cancers (June
2017).
-- Patents protecting SRA737 were granted in the USA and Europe
(May 2017), extending the protection period to 2033 in the USA.
-- Successful outcome from feasibility study with TYK2
inhibitors in T-Cell Acute Lymphoblastic Leukaemia (T-ALL). In
disease models, Sareum's compounds demonstrated good oral
bioavailability, were well tolerated and showed tumour reduction of
up to 80% (October 2016). These results support the further
advancement of the programme.
-- Further patent grants for Aurora+FLT3 kinase programme in
Japan, Singapore, China, and Hong Kong, completing IP protection
for the candidate in all major territories.
Financial highlights
-- Maiden profit (after taxation) on ordinary activities of
GBP400,000 (2016: loss of GBP1.05 million).
-- Net assets at period end were GBP2.34 million (2016: GBP1.86
million), of which GBP2.31 million comprised cash at bank (2016:
GBP1.25 million).
-- GBP1.50 million received from Sierra Oncology as the
Company's share of the $7 million upfront payment from the
out-licensing agreement for SRA737 (September 2016). Milestone
payment of GBP450,000 received (share of $2 million payment)
following the successful transfer of the two ongoing Phase 1
clinical trials of SRA737.
-- Received GBP229,000 in unspent funds previously invested in
clinical development of Chk1 upon the out-licensing of SRA737.
Dr Tim Mitchell, Chief Executive Officer of the Company, said:
"We are very pleased with the progress made during the period
across our pipeline. The licensing of SRA737 is an important
milestone for several reasons: it places the clinical development
and future marketing of this exciting oncology candidate in the
hands of a highly experienced and well-funded team; the agreement
has the potential to provide substantial funds to Sareum, enabling
us to advance and broaden our own pipeline programmes; and overall
it provides important validation of our business model and
expertise for the design and early development of novel drug
candidates that offer attractive licensing opportunities for
potential partners. We expect further important newsflow in the
coming year and look forward to updating shareholders."
Enquiries:
Sareum Holdings plc
Tim Mitchell 01223 497 700
WH Ireland Limited (Nominated Adviser and
Co-Broker)
Chris Fielding / James Sinclair-Ford 020 7220 1666
Hybridan LLP (Co-Broker)
Claire Noyce 020 3764 2341
Citigate Dewe Rogerson (Media
enquiries)
Shabnam Bashir/ Mark Swallow/
David Dible 020 7282 9571
About Sareum
Sareum is a specialist drug discovery and development company
delivering targeted small molecule therapeutics, focusing on cancer
and autoimmune disease, and generating value through licensing them
to international pharmaceutical and biotechnology companies at the
preclinical or early clinical trials stage.
Its most advanced programme, SRA737, is a novel Checkpoint
kinase 1 (Chk1) inhibitor licensed to NASDAQ-listed Sierra Oncology
and in clinical trials targeting a range of advanced cancers. The
key role of Chk1 in cancer cell replication and DNA damage repair
suggests that SRA737 may have broad application as a targeted
therapy in combination with other oncology and immuno-oncology
drugs in genetically defined patients.
Sareum is also advancing programmes to develop novel tyrosine
kinase 2 (TYK2) inhibitors in autoimmune diseases and cancers, and
Aurora+FLT3 inhibitors in haematological cancers, which are in the
IND-enabling preclinical and lead optimisation stages.
The Company's drug discovery technology platform (SKIL(R) -
Sareum Kinase Inhibitor Library) is being applied to generate drug
research programmes against other kinase targets.
Sareum Holdings plc is listed on the AIM market of the London
Stock Exchange, trading under the ticker SAR. For further
information, please visit www.sareum.co.uk.
Full year results for the twelve months ended 30 June 2017
Chairman and CEO's statement
Sareum made important progress during the year ended 30 June
2017 across its key development programmes. The highlight of the
year was the signing of a licence agreement for the Chk1 programme
with Sierra Oncology, Inc (NASDAQ: SRRA). This agreement has
brought a highly committed and well-funded partner, with proven
experience in oncology drug development, to realise the value of
this exciting programme. Already, the impact of Sierra Oncology's
commitment is being seen with the implementation of highly
innovative clinical trial designs. Additionally, clinical
opportunities to explore the potential of SRA737 with other new
classes of targeted cancer therapy are expected in 2018.
The agreement with Sierra Oncology represents a significant
validation of Sareum's business model, which is based on its
expertise in small molecule drug design and its strategy to develop
programmes to late preclinical or early clinical stages. Sareum
aims to take advantage of the substantial values associated with
out-licensing programmes at these stages.
The transfer of development costs to Sierra Oncology, alongside
income from the Chk1 agreement, is enabling Sareum to allocate more
resources to its other programmes. In particular, the TYK2
programme has made encouraging progress during the period and
candidate selection studies for both autoimmune and cancer
indications are expected to commence in the first half of 2018,
while the Aurora+FLT3 programme is advancing through preclinical
development despite some delays.
From a financial perspective, continued efficient capital use
and the receipt of licensing income has resulted in the Company
achieving a maiden profit of GBP400,000.
Programme updates
SRA737 - Checkpoint Kinase 1 (Chk1)
Targeting solid tumours, licensed to Sierra Oncology
SRA737 (formerly CCT245737) is a potent, highly selective,
orally bioavailable small molecule inhibitor of Chk1, a key
regulator of important cell cycle checkpoints and central mediator
of the DNA Damage Response (DDR) network. SRA737 was discovered as
the result of a research collaboration between Sareum, the
Institute of Cancer Research and Cancer Research Technology (CRT).
Preclinical and initial clinical development was carried out in a
co-investment collaboration between Sareum and the CRT Pioneer
Fund. The programme was licensed for further clinical development
and commercialisation to Sierra Oncology in September 2016.
Sierra Oncology is advancing next-generation DDR therapeutics
for the treatment of patients with cancer, and SRA737 is its lead
candidate. This company has a strong management team with a proven
track record in oncology drug development and is well financed with
$116 million cash as at the end of June 2017.
Under the terms of the co-investment agreement with CRT Pioneer
Fund, Sareum is eligible to receive 27.5% of up to $328.5 million
in upfront, development and commercialisation milestone payments,
as well as royalties on sales. An upfront payment of $7 million and
a first milestone payment of $2 million have already been paid by
Sierra Oncology (September 2016 and January 2017, respectively),
with Sareum receiving a total of nearly GBP2 million as its share
of this licence income.
SRA737 is being evaluated by Sierra Oncology in two innovative
Phase 1 clinical trials in patients with advanced cancer and
tumours identified to have genetic aberrations (mutations) that are
thought to confer sensitivity to Chk1 inhibition. Tumour cells can
have many genetic mutations and several of these may result in a
strong reliance on Chk1 function for survival of the tumour. By
blocking Chk1 function in these cases, the tumour cells die; this
is an example of the concept known as "synthetic lethality". Sierra
Oncology submitted amended protocols for both trials, approved in
May 2017, that aim to take advantage of this fundamental role of
Chk1 in cancer with the objective of enhancing patient selection
and maximising potential responses. These innovative trial designs
were also presented at the American Society of Clinical Oncology
(ASCO) annual meeting in June 2017.
The first trial is intended to evaluate the potential of SRA737
as a monotherapy in patients whose cancer has the defined genetic
profile described above. In June 2017, Sierra Oncology reported
that the dose escalation phase of the monotherapy trial had
advanced successfully to beyond 600mg/day dosing (c. 4x the
estimated minimum efficacious dose of 160mg/day) with a
well-tolerated safety profile. The cohort expansion phase of this
trial, now running at eight UK hospitals, is enrolling patients
with five cancer types that are predicted to be highly sensitive to
Chk1 inhibition: colorectal, head and neck, non-small-cell lung,
ovarian and prostate. The trial will assess the maximum tolerated
dose (MTD) of SRA737 and recommend a dose for further (Phase 2)
clinical studies. To determine potential patient selection
strategies for further clinical development, the response of the
patients' cancer to treatment will also be measured to evaluate the
preliminary efficacy of SRA737.
The second trial is designed to explore the potentiating effects
of low-dose gemcitabine (a chemotherapy that causes replication
stress and DNA damage) in combination with SRA737, also in patients
with genetically profiled cancers. The chemotherapy combination
study is initially enrolling patients with the aim to establish the
safety profile, to determine the MTD and to propose a recommended
dose for further development of SRA737 in combination with low-dose
gemcitabine. Once an MTD and dosing schedule have been determined,
the study will evaluate the preliminary efficacy of SRA737 in
combination with low-dose gemcitabine in genetically defined
subjects with bladder or pancreatic cancer.
Sierra Oncology has announced that it will provide an update on
the SRA737 development programme in late February 2018. Sierra
Oncology also expects to present data from its studies at a medical
conference in the second half of 2018.
In addition, Sierra Oncology is evaluating SRA737, with
potential clinical opportunities in 2018, in combination with
targeted cancer therapeutics where there is a strong biological
rationale for synergy with Chk1 inhibition. These include anti-PD-1
and PD-L1 therapies, which are fast becoming established as key
therapeutic options for a range of cancers, and other DDR
inhibitors such as PARP inhibitors.
Sierra Oncology reported, in May 2017, the grant of US and EU
patents extending the protection of SRA737 in these important
markets to 2033.
Tyrosine kinase 2 (TYK2)
With Sierra Oncology now funding the development of SRA737,
Sareum has increased the resources allocated to developing its TYK2
programmes in autoimmune diseases and cancer.
TYK2 is a member of the Janus kinase (JAK) family of kinases
with roles in pro-inflammatory responses in autoimmune diseases and
tumour cell proliferation in certain cancers. Members of the JAK
family are the targets of several marketed and clinical-stage drugs
for cancer and autoimmune diseases, although there are currently no
marketed products specifically targeting TYK2.
Sareum is developing potent and selective, orally available TYK2
inhibitors with potential best-in-class profiles that have shown
initial proof-of-concept in in vivo models of:
-- Psoriasis, rheumatoid arthritis and ulcerative colitis; and
-- T-cell Acute Lymphoblastic Leukaemia (T-ALL).
Sareum has an ongoing co-development agreement with SRI
International (Menlo Park, CA, USA) to develop TYK2 inhibitors in
autoimmune diseases and retains commercialisation rights for these
and other TYK2 inhibitors with profiles optimised for oncology and
immuno-oncology applications.
Targeting autoimmune and inflammatory disorders
Sareum has conducted preclinical studies with several of its
TYK2 inhibitors, which have demonstrated promising and potentially
superior therapeutic profiles in disease models of psoriasis,
rheumatoid arthritis and ulcerative colitis, compared with a
marketed JAK family kinase inhibitor in the latter two cases.
These data have led the Company's partner, SRI International, to
investigate advanced lead molecules in disease models of lupus, and
promising initial efficacy has been observed. These studies are
supported by a US government research grant (US Department of
Defense) of $360,000.
New analogues, with improved selectivity and ADMET (ADME-Tox,
absorption, distribution, metabolism and excretion) properties
continue to progress through internal screening cascades. Disease
model studies with these compounds are planned during the fourth
quarter of 2017. If these disease model studies are successful, the
Company expects to move into the candidate selection phase in the
first half of 2018.
Targeting cancers
Initial studies, assisted by funding from the Innovate UK
Biomedical Catalyst Fund, to investigate the potential of Sareum's
lead TYK2 inhibitors to treat T-ALL have concluded successfully.
The study demonstrated good efficacy of several Sareum TYK2
inhibitors in disease models of T-ALL, both as a single agent and
in combination with standard-of-care chemotherapy. In disease
models, Sareum's compounds demonstrate good oral bioavailability,
were well tolerated, presented good exposure to plasma and tumour
tissue, and showed a dose-dependent effect on a biomarker of TYK2
inhibition and tumour reduction of up to 80%.
These data were presented by Sareum in November 2016 at the
American Association for Cancer Research - National Cancer
Institute - European Organisation for Research and Treatment of
Cancer (AACR-NCI-EORTC) international conference and updated
results were presented by the Company at the International Cancer
Cluster Showcase in June 2017.
The Company is also investigating the potential of its TYK2
inhibitors in solid tumours and blood cancers where there is strong
evidence in the literature that TYK2 inhibition could be effective,
both as a single agent and in combination with standard-of-care
chemotherapy. Several of these studies are being carried out in
leading academic centres worldwide under material transfer
agreements.
Furthermore, Sareum is investigating the potential of its TYK2
inhibitors to overcome tumour resistance to new immune checkpoint
inhibitor therapies. Initial results are promising, and additional
experiments are in progress seeking to identify which tumour types
and immune checkpoint inhibitor combinations might be expected to
benefit most from TYK2 inhibition.
The Company expects to select a candidate for further
development in the oncology field in the first half of 2018,
pending the success of ongoing studies in any one of these cancer
applications.
Aurora+FLT3 kinases
Targeting AML and other blood cancers, in partnership with
HMUBEC
Sareum's third programme is focused on small molecule inhibitors
of Aurora and FLT3 kinases that it has identified as having
potential to be single agent therapies for acute myeloid leukaemia
(AML) and other leukaemias. A lead candidate is in preclinical
development, funded by Sareum's Chinese partner, Hebei Medical
University Biomedical Engineering Center (HMUBEC).
Previous studies have confirmed the potential of this candidate
in AML, and particularly FLT3-mutant AML. Toxicology studies are
underway with initial results suggesting that the candidate is well
tolerated at the predicted therapeutic dose. Further formulation
work, which is causing additional delays, is ongoing to complete
the toxicology studies, with Sareum funding some studies in the UK
to accelerate the resolution of these formulation issues.
The Company is now targeting completion of the preclinical
studies in the second half of 2018.
Separately during the period, the Company's intellectual
property around its Aurora+FLT3 kinase programme was strengthened
by notifications of patents granted in China, Hong Kong, Singapore
and Japan. Sareum now has patent protection in all the major
territories for this programme.
Financial review
Sareum is pleased to report its maiden profit on ordinary
activities for the year ended 30 June 2017 of GBP400,000 (after
taxation) (2016: loss of GBP1.05 million).
The Company ended the year with net assets of GBP2.34 million
(2016: GBP1.86 million), of which GBP2.31 million comprised cash at
bank (2016: GBP1.25 million). The Company received GBP1.50 million
from Sierra Oncology as its share of the $7 million upfront payment
from the out-licensing agreement for SRA737 and a milestone payment
of GBP450,000 received (share of $2 million payment) following the
successful transfer of the two ongoing Phase 1 clinical trials of
SRA737.
Sareum also received GBP229,000 in unspent funds previously
invested in the co-investment partnership with the CRT Pioneer Fund
for the clinical development of the Chk1 programme during the
second half of the period.
Outlook
Overall, the Directors are delighted with the progress made
across the Company's programmes during the period. Sareum's
business model and its expertise in the design and early
development of novel drug candidates that offer attractive
commercialisation opportunities has been strongly validated by the
licence agreement with Sierra Oncology.
From a financial perspective, this progress has culminated in a
maiden profit for the Company.
More importantly, however, Sareum has gained an experienced,
highly committed and well-funded development partner for SRA737 in
Sierra Oncology. The next update from the innovative clinical
development programme with SRA737 that Sierra Oncology is driving
is expected in February 2018.
The income received to date and the future milestone payments
possible (pending their achievement) from this programme is
providing Sareum with increased resources to accelerate its
internal activities. This includes the selection of clinical
candidates in its TYK2 programmes in both autoimmune diseases and
cancer indications, expected in 2018, and further preclinical
progress anticipated in the Aurora+FLT3 programme.
The Company continues to engage with potential partners with a
view to securing commercial licences for its products and
programmes, while exploring new research programmes from its
in-house drug discovery platform, as well as external early stage
opportunities that can be potentially in-licensed and progressed
into the clinic.
Dr Stephen Parker Dr Tim Mitchell
Chairman Chief Executive Officer
Consolidated statement of comprehensive income for the year
ended 30 June 2017
2017 2016
Notes GBP GBP
Continuing operations
Revenue - -
Other operating income 19,996 122,599
Administrative expenses (1,445,792) (995,770)
Share of profit/(loss)
of associates 5 1,775,725 (331,871)
Operating profit/(loss) 349,929 (1,205,042)
------------ -----------------
Finance income 2,991 4,359
------------ -----------------
Profit/(loss) before
income tax 5 352,920 (1,200,683)
Income tax 6 47,423 152,565
------------ -----------------
Profit/(loss) for
the year 400,343 (1,048,118)
-----------------
Total comprehensive
income/(expense) for
the year 400,343 (1,048,118)
------------ -----------------
Profit/(loss) attributable
to:
Owners of the parent 400,343 (1,048,118)
============ =================
Total comprehensive
income/(expense) attributable
to:
Owners of the parent 400,343 (1,048,118)
============ =================
Earnings per share
expressed
in pence per share: 7
Basic 0.015p (0.04)p
Diluted 0.015p -
============ =============
Consolidated balance sheet as at 30 June 2017
2017 2016
Notes GBP GBP
Assets
Non-current assets
Property, plant and
equipment 13,333 1,322
Investments in associates 4 53,639 475,038
------------- -------------
66,972 476,360
------------- -------------
Current assets
Trade and other receivables 80,434 79,288
Tax receivable 48,230 154,840
Cash and cash equivalents 8 2,305,509 1,252,595
------------- -------------
2,434,173 1,486,723
------------- -------------
Liabilities
Current liabilities
Trade and other payables 155,534 99,551
------------- -------------
Net current assets 2,278,639 1,387,172
------------- -------------
Net assets 2,345,611 1,863,532
============= =============
Shareholders' equity
Called up share capital 661,305 661,305
Share premium 11,765,111 11,765,111
Share-based compensation
reserve 191,945 110,209
Merger reserve 27 27
Retained earnings (10,272,777) (10,673,120)
------------- -------------
Total equity 2,345,611 1,863,532
============= =============
Consolidated statement of changes in equity for the year ended
30 June 2017
Called
up share Retained
capital earnings Share premium
GBP GBP GBP
Balance at 30 June
2015 621,859 (9,625,002) 10,761,261
Changes in equity
Issue of share capital 39,446 - 1,003,850
Total comprehensive - (1,048,118) -
expense
Share-based compensation - - -
-------------- ------------- --------------
Balance at 30 June
2016 661,305 (10,673,120) 11,765,111
Changes in equity
Total comprehensive - 400,343 -
income
Share-based compensation - - -
-------------- ------------- --------------
Balance at 30 June
2017 661,305 (10,272,777) 11,765,111
============== ============= ==============
Share-based
compensation Merger
reserve reserve Total equity
GBP GBP GBP
Balance at 30 June
2015 105,014 27 1,863,159
Changes in equity
Issue of share capital - - 1,043,296
Total comprehensive
expense - - (1,048,118)
Share-based compensation 5,195 - 5,195
-------------- ------------- --------------
Balance at 30 June
2016 110,209 27 1,863,532
-------------- ------------- --------------
Changes in equity
Total comprehensive
income - - 400,343
Share-based compensation 81,736 - 81,736
-------------- ------------- --------------
Balance at 30 June
2017 191,945 27 2,345,611
============== ============= ==============
Consolidated cash flow statement for the year ended 30 June
2017
2017 2016
Notes GBP GBP
Cash flows from operating
activities
Cash generated from operations 9 689,837 (862,025)
Tax received 154,033 184,022
---------- ----------
Net cash inflow/(outflow)
from operating activities 843,870 (678,003)
---------- ----------
Cash flows from investing
activities
Purchase of tangible
fixed asset (16,000) -
Purchase of fixed asset
investments - (597,101)
Repayment of investment
funds 228,977 -
Interest received 2,991 4,359
---------- ----------
Net cash inflow/(outflow)
from investing activities 215,968 (592,742)
---------- ----------
Cash flows from financing
activities
Loan to Director (6,924) -
Share issue - 39,446
Share premium on share
issue - 1,003,850
---------- ----------
Net cash inflow from
financing activities (6,924) 1,043,296
---------- ----------
Increase/(decrease) in
cash and cash equivalents 1,052,914 (227,449)
Cash and cash equivalents
at beginning of year 1,252,595 1,480,044
---------- ----------
Cash and cash equivalents
at end of year 8 2,305,509 1,252,595
---------- ----------
Notes to the consolidated financial statements for the year
ended 30 June 2017
1. Basis of preparation
The consolidated financial statements of Sareum Holdings plc and
its subsidiaries (the Group) have been prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted for
use in the European Union, with IFRIC interpretations and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared
under the historical cost convention.
IFRS comprise standards and interpretations approved by the
IASB. IFRS as adopted by the European Union differ in certain
respects from IFRS as issued by the IASB. However, consolidated
financial statements for the financial years presented would be no
different had IFRS as issued by the IASB been applied. References
to IFRS hereafter should be construed as references to IFRS as
adopted by the European Union.
Going concern
The Directors estimate that the cash held by the Group will be
sufficient to support the current level of activities for the
foreseeable future. Therefore, the financial statements have been
prepared on a going concern basis.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 June each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of another entity or business, so as to
obtain benefits from its activities. The consolidated financial
statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Inter-company
transactions and balances between Group companies are eliminated on
consolidation.
2. Statutory information
Sareum Holdings plc is a public limited company, registered in
England and Wales. The Company's registered number is 05147578 and
the registered office address can be found in note 10 below.
3. Accounting policies
The principal accounting policies applied are set out below.
Property, plant and equipment
Depreciation is provided at the following annual rates in order
to write off each asset over its estimated useful life:
Motor vehicles - straight line over three years
Fixtures and computers - straight line over three or four
years
Financial instruments
Financial instruments are classified and accounted for,
according to the substance of the contractual arrangement, as
either financial assets, financial liabilities or equity
instruments. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to
insignificant risk of change in value.
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events have occurred at that date that will
result in an obligation to pay more, or a right to pay less or to
receive more, tax with the following exception:
Deferred tax assets are recognised only to the extent that the
Directors consider that it is more likely than not that there will
be suitable taxable profits from which the future reversal of the
underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax
rates that are expected to apply in the periods in which timing
differences reverse, based on the tax rates and laws enacted or
substantively enacted at the balance sheet date.
Research and development
Expenditure on research and development is written off in the
year in which it is incurred.
Operating lease agreements
Rentals applicable to operating leases where substantially all
the benefits and risks of ownership remain with the lessor are
charged against profits on a straight-line basis over the period of
the lease.
Pension contributions
The Group does not operate a pension scheme for the benefit of
its employees but instead makes contributions to their personal
pension policies. The contributions due for the period are charged
to the profit and loss account.
Employee share scheme
The Group has in place a share option scheme for employees,
which allows them to acquire shares in the Company. Equity-settled
share-based payments are measured at fair value at the date of
grant. The fair value of options granted is recognised as an
expense spread over the estimated vesting period of the options
granted. Fair value is measured using the Black-Scholes model,
taking into account the terms and conditions upon which the options
were granted.
Revenue recognition
Revenue is measured as the fair value of the consideration
received or receivable in the normal course of business, net of
discounts, VAT and other sales-related taxes and is recognised to
the extent that it is probable that the economic benefits
associated with the transaction will flow to the Company. Grant
income is recognised as earned based on contractual conditions,
generally as expenses are incurred.
Investment in associates
An associate is an entity over which the Company has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not
control or joint control over those policies. Investments in
associates are accounted for using the equity method, whereby the
investment is initially recognised at cost and adjusted thereafter
for the post-acquisition change in the associate's net assets with
recognition in the profit and loss of the share of the associate's
profit or loss.
Critical accounting estimates and areas of judgement
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates. The
estimates and assumptions that have the most significant effects on
the carrying amounts of the assets and liabilities in the financial
information are considered to be research and development costs and
equity-settled share-based payments.
Accounting standards and interpretations not applied
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Group that
have not been applied in these financial statements were in issue
but not yet effective:
Standard Effective for accounting periods
starting on or after
IAS 12 Recognition of Deferred Tax
Assets for Unrealised Losses 1 January
Amendments to IAS 12 2017
IFRS 9 Financial Instruments 1 January 2017
IFRS 15 Revenue from Contracts with 1 January 2017
Customers
The Directors anticipate that the adoption of these standards
and interpretations in future years will have no material impact on
the financial statements of the Group.
No standards or interpretations adopted in the year had any
material impact on the financial statements of the Group.
4. Investments in associates
Interest
in associates
GBP
Cost
At 1 July 2016 1,367,101
Less: Refund of unused investment
funds (228,977)
At 30 June 2017 1,138,124
Impairment
At 1 July 2016 892,063
Impairment for the year 192,422
At 30 June 2017 1,084,485
---------------
Net book value
At 30 June 2017 53,639
===============
At 30 June 2016 475,038
===============
The Investment in associates represents the investment by the
Group in the partnership with the Cancer Research Technology (CRT)
Pioneer Fund to advance the Chk1 programme. The associate has been
accounted for using the equity method in the consolidated financial
statements. Sareum's interest in the associate partnership is 27.5%
and they had a seat on the joint research committee. As at 30 June
2017 the partnership had net assets of GBP200,464 (2016:
GBP1,731,051) and had incurred cumulative losses of GBP472,756
(2016: GBP4,068,949). During the year the programme was licensed by
the partnership to Sierra Oncology, Inc. and the partnership
returned GBP228,977 to Sareum in respect of unused investment
funds.
5. Profit/(loss) before income tax
The profit/(loss) before income tax is stated after
charging:
2017 2016
GBP GBP
Other operating leases 11,210 11,185
Depreciation - owned assets 3,989 1,765
Research and development 1,002,342 927,644
Auditor's remuneration - see
analysis below 13,915 14,300
========== ==========
The share of profit/(loss) of
associates is made up of:
Share of income of associate 1,968,147 -
Share of costs of associate (192,422) (331,871)
---------- ----------
Share of profit/(loss) of associate 1,775,725 (331,871)
========== ==========
The analysis of auditor's remuneration
is as follows:
Fees payable to the Company's
auditor for the audit of the
annual accounts:
Audit of the Company 4,500 4,200
Audit of subsidiaries 7,300 6,800
---------- ----------
Total audit fees 11,800 11,000
Fees payable to the Company's
auditor for other services:
Taxation services 1,300 1,300
Other assurance services 815 2,000
---------- ----------
Total fees payable to the Company's
auditor 13,915 14,300
========== ==========
6. Income tax
2017 2016
GBP GBP
Current tax:
UK corporation tax credit on
profits/losses of the period (47,423) (151,526)
Adjustments recognised in the
current year in relation to the
current tax of prior years - (1,039)
--------- ----------
Tax credit to the income statement (47,423) (152,565)
========= ==========
The credit for the year can be reconciled to the accounting loss
as follows:
2017 2016
GBP GBP
Profit/(loss) before tax 352,923 (1,200,683)
========== ============
At average rate of 19.75% (2016:
20%) 69,702 (240,137)
Effects of:
Capital allowances (less)/more
than depreciation (161) 12
Other timing differences 435 -
Unutilised tax losses 45,445 149,255
Losses surrendered for research
and development tax credits (less
uplift) (115,421) 90,870
Research and development tax
credits claimed (47,423) (151,526)
Prior year adjustments - (1,039)
---------- ------------
Actual current tax credit in
the year (47,423) (152,565)
========== ============
7. Loss per share
The calculation of profit/(loss) per share is based on the
following data:
Basic profit/(loss) per share:
2017 2016
Profit/(loss) on ordinary activities
after tax GBP400,343 GBP(1,048,118)
Weighted average number of shares
for basic loss per share 2,645,223,988 2,524,944,713
Basic profit/(loss) per share 0.015p (0.04)p
Diluted profit/(loss) per share:
2017
Profit/(loss) on ordinary activities
after tax GBP400,343
Weighted average number of shares
for basic loss per share 2,741,309,965
Basic profit/(loss) per share 0.015p
As the Group generated a loss for the year to 30 June 2016,
there was no dilutive effect in respect of share options.
8. Cash and cash equivalents
2017 2016
GBP GBP
Bank deposit account 2,296,439 1,245,707
Bank accounts 9,070 6,888
---------- ----------
2,305,509 1,252,595
========== ==========
9. Reconciliation of profit/(loss) before income tax to cash
generated from operations
2017 2016
GBP GBP
Profit/(loss) before income tax 352,920 (1,200,683)
Depreciation charges 3,989 1,765
Share-based compensation 81,736 5,195
Share of cost of associate 192,422 331,871
Finance income (2,991) (4,359)
------------
628,076 (866,211)
Decrease/(increase) in trade
and other receivables 5,778 (27,922)
Increase in trade and other payables 55,983 32,108
-------- ------------
Cash used in operations 689,837 (862,025)
======== ============
10. Dividend
The Directors are not able to recommend payment of a
dividend.
11. Copies of the report and accounts
Copies of the report and accounts will be posted to those
shareholders that have requested them. Copies will also be
available from the Company's registered office at 2a Langford Arch,
London Road, Pampisford, Cambridge CB22 3FX.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/9927T_-2017-10-18.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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