Sareum Holdings PLC

(“Sareum” or the “Company”)

FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2020

Cambridge, UK, 13 October 2020 – Sareum Holdings plc (AIM: SAR), the specialist drug development company delivering targeted small molecule therapeutics to improve the treatment of cancer and autoimmune diseases, announces its results for the year ended 30 June 2020.

The Company will be holding a presentation to investors on 16 October 2020 at 10.00 a.m. via the Investor Meet Company platform – please click on this link to register to attend: https://www.investormeetcompany.com/sareum-holdings-plc/register-investor.

The Company expects to publish its Annual Report and Accounts, along with the Notice of the Company’s Annual General Meeting, in November 2020.

OPERATIONAL HIGHLIGHTS (including post-period updates)

Proprietary Programmes – Selective TYK2/JAK1 Inhibitors in Autoimmune Diseases and Cancer

SDC-1801 (autoimmune diseases)

  • A new formulation specifically designed to deliver higher exposure levels of SDC-1801 has recently been developed by the Company, which is suitable for progressing into the further toxicology studies needed prior to applying to investigate SDC-1801 in human trials.
  • SDC-1801 has demonstrated excellent tolerability in initial toxicology studies in rodents. A formulation that is predicted to deliver a therapeutic dose level has also been identified.
  • If progress is successful, the application to commence first human trials is expected to be made during Q1 2021.

SDC-1802 (cancer immunotherapy)

  • Formulation work for oral dosing of SDC-1802 is complete and toxicology studies and further manufacturing work are planned over the coming months.
  • In October 2019, Sareum presented new findings showing that SDC-1802, dosed orally as a monotherapy and in combination with chemotherapy, significantly reduces tumour growth in models of solid tumours and blood cancers.
  • In October 2020, the Company received a Notice of Allowance for its US patent covering SDC-1802, the grant of which will complete the patent protection of this compound in all major territories.

TYK2/JAK1 Inhibitors for treating symptoms of Covid-19

  • A grant application has been submitted to UK Research and Innovation (UKRI) to fund preliminary laboratory studies investigating the potential of Sareum’s TYK2/JAK1 inhibitors to address the severe inflammatory responses (the “cytokine storm”) and potentially fatal respiratory symptoms of Covid-19 and other viral infections.
  • A response is expected by the end of October 2020 which, if successful, will enable initial studies to begin shortly thereafter.

Licensed Programmes

FLT3+Aurora Inhibitors (haematological cancers)

  • On 26 March 2020, Sareum announced it entered a global licensing deal for its FLT3+Aurora kinase inhibitor programme targeting blood cancers with a China-based specialty pharmaceutical company (the “Licensee”).
  • Sareum received an upfront payment and is eligible to receive an additional c.£0.90m should certain milestones be achieved by January 2021, being within nine months of signing and receipt of programme materials by the Licensee. Sareum is also eligible to receive a further development-based milestone, and revenues upon the commercialisation of any resulting products.

 SRA737: A Selective Chk1 inhibitor (solid cancers)

  • The licence holder for SRA737, Sierra Oncology Inc. (“Sierra”), stated in August 2020 that it was exploring internal and external options to support the continued development of SRA737.
  • As of 25 September 2020, Phase 1/2 trials of SRA737 as a monotherapy and in combination with low dose gemcitabine were both reported to be complete.
  • In March 2020, new research published in Cancer Research highlighted the anti-cancer effect of SRA737 in multiple human lung and colorectal cancer cells, when used in combination with small molecules that block DNA replication and repair (B-family DNA polymerases), further adding to the encouraging data generated on SRA737.

AUDITED FINANCIAL HIGHLIGHTS

  • As previously indicated, R&D Tax Credit of £0.23m was received in January 2020.
    • Loss on ordinary activities for the year ended 30 June 2020 (after taxation) of £0.99m (2019: loss of £1.45m), reflecting the Company’s careful management of cash resources.
    • Cash at bank as of 30 June 2020 was £1.80m (£1.0m as of 31 December 2019; £0.92m as of 30 June 2019).
    • As announced on 17 December 2019, the Company confirmed that all directors had entered a voluntary salary deferral scheme, whereby 33% of directors’ salaries were being deferred until further notice. On 1 July 2020, the Company announced an update to the Salary Deferral Scheme and announced the settlement of directors’ deferred salary through the issue of new ordinary shares. The Company also agreed to reduce the terms of CEO Dr Tim Mitchell’s salary deferral from 33% to 20% of his salary going forward. All other directors agreed to continue to defer 33% of their salaries until further notice.
  • Raised £1.02m (gross) in June 2020 through a placing by Hybridan LLP in conjunction with an offer via PrimaryBid to progress the Company’s TYK2/JAK1 drug development programmes as well as for working capital purposes.
Full Year Results 2020 available as PDF document: FY Results 2020 

Dr Tim Mitchell, CEO of Sareum, commented:

“Sareum has continued to make good progress with the preclinical development of our proprietary dual TYK2/JAK1 inhibitor programmes. Most recently, we have overcome an important formulation challenge with SDC-1801, which will now be advanced into the toxicology studies needed to complete our preparations for clinical trials.

“In addition, we are pleased to have raised additional funding during the period, which will be deployed to advance our proprietary programmes towards clinical development and build a robust data package to support our ongoing partnering activities for these exciting and differentiated assets.

“We were pleased to sign a global licensing deal for our FLT3+Aurora inhibitor programme targeting blood cancers with a China-based specialty pharma company during the period. Progress is being made by the Licensee in line with its development plan. Further good progress would enable us to receive a success-dependent milestone payment by January 2021 from this agreement.

“Regarding SRA737, we continue to monitor Sierra Oncology’s activities as it explores options to fund the future development of this novel compound. We were pleased to note that as of 25 September 2020, the website www.clinicaltrials.gov is reporting that the Phase 1/2 trials of SRA737 as a monotherapy and in combination with low dose gemcitabine in solid cancers are complete. We look forward to the results of these completed trials being disclosed. We will provide further updates on this and other programmes when appropriate.”

For further information, please contact: 

Sareum Holdings plc

Tim Mitchell, CEO                                                            01223 497 700

Strand Hanson Limited (Nominated Adviser)

James Dance / Richard Tulloch                                    020 7409 3494

Hybridan LLP (Nominated Broker)

Claire Noyce / John Beresford-Peirse                      020 3764 2341

Citigate Dewe Rogerson (Financial PR)

Mark Swallow/ David Dible                                          020 7638 9571

About Sareum

Sareum is a specialist drug development company delivering targeted small molecule therapeutics to improve the treatment of cancer and autoimmune diseases. The Company aims to generate value through licensing its candidates to international pharmaceutical and biotechnology companies at the preclinical or early clinical trials stage.

Sareum is advancing internal programmes focused on distinct dual tyrosine kinase 2 (TYK2) / Janus kinase 1 (JAK1) inhibitors through preclinical development as therapies for autoimmune diseases, including the “cytokine storm” immune system overreaction to Covid-19 and other viral infections, (SDC-1801) and cancer immunotherapy (SDC-1802).

The Company’s preclinical FLT3+Aurora inhibitor programme targeting haematological cancers is licensed to a China-based specialty pharma company.

Sareum also has an economic interest in SRA737, a clinical-stage oral, selective Checkpoint kinase 1 (Chk1) inhibitor that targets cancer cell replication and DNA damage repair mechanisms. Preliminary Phase 2 and comprehensive preclinical data suggest SRA737 may have broad application in combination with other oncology and immune-oncology drugs in genetically defined patients.

SRA737 was discovered and initially developed by scientists at The Institute of Cancer Research in collaboration with Sareum, and with funding from Sareum and Cancer Research UK. SRA737 was licensed by CRT Pioneer Fund (CPF) to Sierra Oncology Inc. Sierra is currently exploring options to obtain the funding or support necessary to advance the future development of SRA737.

Sareum Holdings plc is listed on the AIM market of the London Stock Exchange, trading under the ticker SAR. For further information, please visit the Company’s website at www.sareum.com.

- Ends -


 

Full year results for the 12 months ended 30 June 2020

Chairman’s and CEO’s Statement

Sareum’s primary focus during the year has been to continue advancing its proprietary, selective dual tyrosine kinase 2 (TYK2) / Janus kinase 1 (JAK1) inhibitors through preclinical development. These exciting candidates are being developed as potential once-daily, oral immunotherapies targeting autoimmune diseases (SDC-1801) and cancers (SDC-1802).

Both molecules demonstrate high selectivity for TYK2 and JAK1 kinases, with promising early safety data as well as compelling activity being seen in relevant disease models.

In addition, both programmes represent unique licensing opportunities for pharmaceutical partners as there are currently no marketed products with the selectivity profile of these molecules.

The Company continues to advance these development programmes and was successful in raising just over £1 million in June 2020 to enable it to continue pursuing the following key objectives:

  • Complete experimental clinical trial enabling studies with at least one candidate by the end of 2020. Having recently succeeded in developing a higher dose formulation for toxicity testing, the Company expects to submit a Clinical Trials Application (CTA) in Q1 2021.
  • Continue preclinical studies to determine the initial target indications prior to the start of first-in-human studies.
  • Continue building a robust preclinical data package to support ongoing partnering activities.
  • Continue and advance initial discussions with potential partners to secure commercial licences for these assets when they reach late preclinical or early clinical stages.

In addition, the Covid-19 pandemic has presented a further opportunity where these programmes may have application. The Company has submitted an application for grant funding from UK Research and Innovation (UKRI) for preliminary laboratory studies to assess the potential of its TYK2/JAK1 inhibitors to address the severe inflammatory responses (the “cytokine storm”) and potentially fatal respiratory symptoms of Covid-19 and other viral infections. Whilst there can be no certainty that the application will be successful, a decision is expected by the end of October, and if it is positive, the Company intends to initiate the studies as soon as possible thereafter.

The Company was pleased to announce in March 2020 that it had signed a global licensing agreement for its FLT3+Aurora kinase inhibitors targeting haematological (blood) cancers with a China-based specialty pharmaceutical company. Under this agreement, Sareum received a small upfront payment of £50,000 and is eligible to receive a further c.£0.90 million should certain milestones be achieved by January 2021. The Licensee reports that progress is being made in line with its development plan, with the prospect that further good progress will enable the Company to receive the milestone payment. The Company is also eligible for additional success-based development and commercialisation payments. However, there can be no certainty that the milestones will be achieved or that any further payments will become due.

With regards to the Chk1 inhibitor SRA737, the licensee, Sierra Oncology Inc. (“Sierra”), noted in August 2020 that it was exploring options to support the continued development of SRA737. This candidate has demonstrated encouraging preliminary results in Phase 1/2 clinical trials, particularly in anogenital cancer, and promising data from preclinical studies in combination with a range of other therapeutic approaches. The Board was pleased to see that both clinical trials are now being reported as completed on the website www.clinicaltrials.gov and looks forward to the final results being disclosed. The Company remains in dialogue with CRT Pioneer Fund (CPF), the licensor of SRA737 to Sierra, and will update the market with any meaningful developments.

 

From an operational perspective, Sareum has remained fully functional during the Covid-19 pandemic. To date there has been limited impact on the Company’s network of Contract Research Organisations. While this has not so far affected the Company’s timeline to a large extent, there may be longer delays or other factors that impact effectiveness if restrictions on work and movement are increased.

 

Finally, the Board continues rigorously to manage the working capital position of the Company and has taken steps, including through a Board salary deferral scheme, to maximise its cash runway. The Company remains focused on deploying its funds to ensure the continued progress of its two TYK2/JAK1 programmes towards achieving their key development objectives and thereby increasing the value of the business.

 

PROGRAMME UPDATES

Selective TYK2/JAK1 Inhibitors in Autoimmune Diseases and Cancer

SDC-1801 (autoimmune diseases)

SDC-1801 and related molecules have shown promising activity in autoimmune disease models, including psoriasis, rheumatoid arthritis, inflammatory bowel disease and systemic lupus erythematosus (SLE).

Sareum has progressed SDC-1801 through preclinical studies that have shown the compound to have excellent tolerability in toxicology studies in rodents and work is continuing towards completing the dose-finding and longer-term toxicology studies ahead of human trials.

The Company has identified a formulation that is predicted to deliver a therapeutic dose level. A higher dose formulation has recently been developed, which is suitable to enable progression into the toxicology studies needed prior to applying to investigate SDC-1801 in human trials. This work is expected to be substantially complete in 2020 and, if successful, the CTA to gain approval to start first in human trials is expected to be submitted during Q1 2021.

A robust manufacturing route has been developed to produce active ingredient under GMP (Good Manufacturing Practice) conditions for both preclinical and clinical studies.

In addition, in June 2020, encouraging data were reported from preclinical studies with Sareum’s TYK2/JAK1 inhibitors in disease models of systemic lupus erythematosus. These studies were conducted by co-development partner SRI International (Menlo Park, CA, USA) under a US Department of Defense (DoD) grant and published on the website of the Defense Technical Information Center.

SDC-1802 (cancer immunotherapy)

SDC-1802 and related TYK2/JAK1 inhibitors have shown encouraging anti-tumour activity in multiple cancer disease models. Sareum has global commercialisation rights for TYK2/JAK1 inhibitors with profiles optimised for oncology and immuno-oncology applications.

SDC-1802 is advancing behind SDC-1801 in preclinical development. Formulation work for oral dosing is complete and toxicology studies and further manufacturing work are planned over the coming months.

In October 2019, Sareum presented new findings showing that SDC-1802, dosed orally as a monotherapy and in combination with chemotherapy, significantly reduces tumour growth in models of solid tumours and blood cancers. SDC-1802 was found to act through a novel immunotherapeutic mechanism of action.

These findings were presented at the American Association for Cancer Research (AACR) National Cancer Institute (NCI) European Organisation for Research and Treatment of Cancer (EORTC) International Conference.

On 8 October 2020, Sareum received a Notice of Allowance from the US Patent and Trademark Office for a US patent to protect SDC-1802 and pharmaceutical preparations thereof. Subject to certain formalities being completed, the Company expects that the patent will be granted within three months of this date. Grant of this patent will complete the patent protection for this programme across all major territories and follows similar patent protection granted in Europe and in Japan and China.

The Company believes that the grant of this patent will enhance the value of its TYK2/JAK1 inhibitor programmes overall and the Company’s negotiating position as it continues to engage in discussions with potential licence partners.

TYK2/JAK1 Inhibitors for treating symptoms of Covid-19

There is substantial evidence in the scientific literature to suggest that inhibitors of TYK2/JAK1 signalling could address the severe inflammatory responses (the “cytokine storm”) and potentially fatal respiratory symptoms of Covid-19 and other viral infections.

Several clinical trials with JAK kinase inhibitors have been started to investigate the potential of targeting this pathway as a therapeutic approach. On 8 October 2020, Eli Lilly & Co. reported promising data from its Phase 3 trials of baricitinib, which inhibits JAK1/JAK2 kinase-mediated cytokine release, in hospitalised Covid-19 patients. The data showed that baricitinib in combination with the anti-viral drug remdesivir significantly reduced the time to recovery vs remdesivir alone, particularly in patients that required supplemental oxygen. Mortality was also decreased, again more pronounced in patients receiving oxygen.

Based on the growing evidence to support this approach, and the fact that several other clinical studies with JAK inhibitor molecules have been initiated in response to the Covid-19 pandemic, Sareum has applied for grant funding to conduct preliminary laboratory studies investigating the ability of its TYK2/JAK1 inhibitors to modulate (down-regulate) the overactive immune system in relevant cellular and mouse disease models.

A grant application has been submitted to UK Research and Innovation (UKRI) and, whilst there can be no certainty that the application will be successful, a response is expected by the end of October 2020. If the application is successful, the Company intends to initiate studies as soon as possible thereafter.

These preliminary studies have been designed as a potential first step towards clinical studies, pending success and further funding.

Licensed Programmes

FLT3+Aurora Inhibitors

On 26 March 2020, Sareum announced it entered a global licensing deal for its FLT3+Aurora kinase inhibitor programme targeting blood cancers with a China-based specialty pharmaceutical company (the “Licensee”). Under the terms of the agreement, the Licensee will fund all future development activities for the licensed compounds and has been granted the sole rights to commercialise any resulting products worldwide.

Sareum received a small upfront payment on signing and is eligible for c.£0.90 million due on certain milestones being achieved within nine months of signing and receipt of programme data by the Licensee, with a subsequent payment due on the achievement of a pre-specified development milestone. The Licensee confirmed receipt of the programme materials on 7 April 2020 and is making progress in line with its development plan.

Sareum is also eligible to receive a further development-based milestone, and revenues upon the commercialisation of any resulting products. However, there can be no certainty that any milestones will be achieved and/or that any further payments will become due.

Licensed Programme – SRA737: A Selective Chk1 inhibitor

SRA737 is a potent, highly selective, orally bioavailable small molecule inhibitor of Checkpoint Kinase 1 (Chk1), a key regulator of important cell cycle checkpoints and central mediator of the DNA Damage Response (DDR) network.

SRA737 is licensed to Sierra Oncology, which has presented positive preliminary safety & efficacy data of the combination of SRA737+low-dose gemcitabine (LDG) from a broad Phase 1/2 clinical development programme, which potentially supports further development in anogenital cancer. As of 25 September 2020, both this combination trial and an SRA737 monotherapy study are now being reported as completed on the website www.clinicaltrials.gov and the final results are anticipated to be published in due course.

Sierra has also presented compelling preclinical data supporting the use of SRA737 in combination with novel targeted therapeutic approaches, including PARP inhibitors and immune checkpoint blockade.

Furthermore, in March 2020, new research published in the peer-reviewed journal Cancer Research highlighted the anti-cancer effect of SRA737 in multiple human lung and colorectal cancer cells, when used in combination with small molecules that block the function of a family of proteins involved in DNA replication and repair (B-family DNA polymerases).*

In June 2019, Sierra announced it was exploring non-dilutive strategic options to support the next stages of development of SRA737. Sierra has since appointed a new Chief Executive Officer, Dr Stephen Dilly, on 1 June 2020. On 6 August, in the notes to Sierra’s 10-Q Quarterly Report, it stated that it is exploring options to support the continued development of SRA737.

The Company remains committed to updating the market when there are any meaningful developments announced by Sierra.

*R.F. Rogers et al. CHK1 inhibition is synthetically lethal with loss of B-family DNA polymerase function in human lung and colorectal cancer cells. (2020) Cancer Research https://cancerres.aacrjournals.org/

Impact of Covid-19 on operations

The Covid-19 pandemic has affected everyday activities on an unprecedented global scale. The Company has been following UK government advice to minimise risk to staff. At present, Sareum remains fully operational, although management’s effectiveness may be impacted if restrictions are increased. To date there has been only minor impact on the Company’s network of Contract Research Organisations, with some short delays in the delivery of chemical intermediates and solvents, and a slight increase in lead times when initiating experiments. Whilst this has not so far affected the Company’s timelines to a large extent, there may be longer delays if further restrictions on work and movement are added.

FINANCIAL REVIEW

Sareum ended the year to 30 June 2020 with net assets of £1.80 million (2019: £1.09 million) of which £1.80 million (£1.00 million as of 31 December 2019; £0.92 million as of 30 June 2019) comprised cash at bank.

The cash balance includes proceeds from a placement that raised £1.02 million (gross) in June 2020, which comprised a placing by Hybridan LLP in conjunction with an offer via PrimaryBid, resulting in the issue of, in aggregate, 170,370,400 new ordinary shares of 0.025p each in the capital of the Company (“Ordinary Shares”) at 0.6p per share.

The new funds are being deployed to progress the Company’s TYK2/JAK1 drug development programmes as well as for working capital purposes.

Non-cash assets include a R&D tax credit of £135,000, which is expected to be received as cash in January 2021.

Operating expenses for the period at £1.14 million (2019: £1.68 million) have been significantly reduced compared to the previous 12-month period as the Company carefully manages its financial resources and focuses its research expenditure on its proprietary TYK2/JAK1 autoimmune disease and cancer programmes.

Loss on ordinary activities for the period (after taxation) was £0.99 million (2019: loss of £1.45 million), again reflecting the Company’s careful management of cash resources.

Salary Deferral Scheme

As announced on 17 December 2019, the Company confirmed that all directors had entered a voluntary salary deferral scheme, whereby 33% of directors’ salaries were being deferred until further notice (the “Salary Deferral Scheme”).

On 1 July 2020, the Company announced an update on the Salary Deferral Scheme and announced the settlement of directors’ accrued deferred salaries up to 30 June 2020, after deducting all applicable taxes which will be settled by the Company, through the issue of new Ordinary Shares (the “Deferred Salary Shares”). The issue of the Deferred Salary Shares had a positive effect of reducing the Company’s accrued liabilities by an aggregate amount of £124,152 (including the cash settlement of applicable taxes).

The Company also agreed to reduce the terms of CEO Dr Tim Mitchell’s salary deferral from 33% to 20% of his salary going forward. All other directors agreed to continue to defer 33% of their salaries until further notice.

Outlook

The past year has seen Sareum advance the preclinical development of its proprietary dual TYK2/JAK1 inhibitor programmes. The Company has successfully developed a higher dose formulation of SDC-1801 in recent weeks, which is suitable to enable progression into the toxicology studies needed prior to applying to investigate SDC-1801 in human trials. This work is expected to be substantially complete in 2020 and, if successful, the CTA is expected to be submitted during Q1 2021.

The Company also awaits the outcome of its grant application to UK Research and Innovation (UKRI), and, whilst there can be no certainty that the application will be successful, a response is expected by the end of October 2020. If the application is successful, the Company intends to initiate studies as soon as possible thereafter.

The successful fundraise during the period is being deployed to advance Sareum’s TYK2/JAK1 programmes towards clinical development and build a robust data package to support ongoing partnering activities for these differentiated assets. Further updates will be given as these programmes advance through material milestones.

The Company’s financial position could be strengthened further by January 2021, if continued positive progress in the licensed FLT3+Aurora inhibitor programme triggers the c.£0.90 million due on certain milestones being achieved. It should be noted though, that whilst the Licensee reports progress is being made, there can be no certainty that the milestone payment will become due.

Regarding SRA737, Sareum continues to monitor Sierra’s activities as it explores options to, both internally and externally, fund the future development of this novel compound. With both clinical trials now reported to be complete, final results are anticipated in the future. Sareum is committed to providing further updates on this programme when information becomes available.

Overall, the Company expects to report on continued progress with its internal, proprietary programmes and its licensed programmes during the coming year. For its TYK2/JAK1 inhibitor programmes, the Directors will continue to review the potential higher value of a later-stage licensing deal versus the requirement for any additional funding.

Meanwhile, the Board and management will continue to employ rigorous capital management in the development of its internal assets and its overall business, with a clear focus on generating value for shareholders.

 

Dr Stephen Parker                                                                                           Dr Tim Mitchell

Chairman                                                                                                            Chief Executive Officer

 


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