SAREUM HOLDINGS PLC

(“Sareum” or “the Company”)

FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2021

Cambridge, UK, 25 October 2021 – Sareum Holdings plc (AIM: SAR), the specialist drug development company delivering targeted small molecule therapeutics to improve the treatment of autoimmune diseases and cancer, announces its audited results for the year ended 30 June 2021.

The Company will be holding a presentation to investors on Tuesday, 2 November 2021 at 11.00 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 2021.

OPERATIONAL HIGHLIGHTS (including post-period updates)

Proprietary Programmes – Selective TYK2/JAK1 Inhibitors

SDC-1801 (autoimmune diseases and severe Covid-19)

  • Progress made advancing SDC-1801 with preclinical phase nearing completion
  • Development of improved drug product underway for first clinical studies; decision made to develop potentially higher-value capsule formulations rather than orally dosed solutions or suspensions means this stage is expected to complete during H1 2022
  • Consultants appointed to assist in developing the plan for initial clinical studies
  • Exploratory Clinical Trial Application (“CTA”) now expected to be filed mid-2022 owing to the additional time needed to manufacture capsule drug product, and subject to successful completion of final toxicity and safety studies
  • First clinical studies targeted to begin shortly thereafter, subject to drug product supply, gaining the requisite approvals and additional funding
  • Promising cellular and in-vivo results from completed UK Research & Innovation (“UKRI”) -funded research project suggest therapeutic potential of SDC-1801 in severe phase Covid-19
  • Encouraging preclinical data reported with Sareum’s TYK2/JAK1 inhibitors in systemic lupus erythematosus disease models – studies conducted by co-development partner SRI International under a US Department of Defense grant

SDC-1802 (cancer immunotherapy)

  • Translational studies underway to define the optimal cancer application prior to completing toxicology and manufacturing studies
  • Two new US patents granted (January and September 2021) strengthening patent protection, which is now in place across all major territories

Licensed Programmes

SRA737: A Selective Chk1 inhibitor (cancer)

  • Sierra Oncology, Inc. (“Sierra”) continues to explore options for continuing development and Sareum believes that the licensing agreement amendment [noted below] will prove important in expediting this development
  • In November 2020, Sierra and CRT Pioneer Fund LP (“CPF”) amended the 2016 licensing agreement for SRA737: revised milestone schedule includes $2.0m payment upon the dosing of the first patient in the next clinical trial, and slightly reduced overall outstanding milestones payable by Sierra (reduced from $319.5m to $290.0m)
  • Sareum remains eligible to receive 27.5% of the economics of the Licence Agreement
  • Post period-end, Sierra announced the in-licensing of the BET inhibitor AZD5153 (now known as SRA515) from AstraZeneca and noted potential combinations with SRA737 as a possible pipeline expansion opportunity and that first clinical studies could start in H1 2022

FLT3+Aurora Inhibitors (haematological cancers)

  • Licensing partner for FLT3+Aurora kinase inhibitor programme discontinued development as it was unable to achieve required bioavailability and returned worldwide rights to Sareum; the programme remains available for further licensing whilst the Board considers alternative routes to progress the programme

AUDITED FINANCIAL HIGHLIGHTS

  • Raised £2.37m before expenses in June 2021 through two subscriptions by a high net worth individual
  • Cash at bank as of 30 June 2021 of £2.7m (£1.3m as at 31 December 2020; £1.8m as at 30 June 2020)
  • R&D tax credit of £0.13m received in January 2021
  • Loss on ordinary activities (after taxation) for the year ended 30 June 2021 of £1.5m (2020: loss of £0.99m), reflecting the increased R&D expenditure required for preclinical development

Post Period End

  • Raised a further £2.18m (before expenses) in July and August 2021 through share subscriptions by two additional high net worth individuals plus an exercise of warrants.
  • Cash at bank as of 30 September 2021 of £4.4m

Full Year Results 2021 available as PDF document: FY Results 2021 

Dr Tim Mitchell, CEO of Sareum, commented:

“Sareum continues to advance the preclinical development of its proprietary dual TYK2/JAK1 inhibitor programmes. We are close to completing the preclinical development of SDC-1801 with the aim of starting the clinical development of this novel compound in the second half of 2022. This is clearly a very important milestone for the Company. In addition, the early preclinical results we have seen with SDC-1801 in our Covid-19 programme suggest that it may have potential to address the hyper-inflammatory response that some patients experience, and we are looking at the next steps to advance development in this indication. We are particularly pleased to have raised substantial additional funding that will be deployed to advance these programmes into clinical development and build a robust data package that will add momentum to our ongoing partnering activities for these exciting and differentiated assets.

“Furthermore, the possibility that clinical combination studies of SRA737 could be initiated by Sierra in the first half of 2022 is very encouraging and would represent a significant advance in the development of the SRA737 programme. We look forward to further updates on the clinical development of this candidate as the programme progresses.”

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

For further information, please contact: 

Sareum Holdings plc

Tim Mitchell, CEO

 

 

01223 497 700

Strand Hanson Limited (Nominated Adviser)

James Dance / James Bellman

 

 

020 7409 3494

Hybridan LLP (Nominated Broker)

Claire Noyce

 

 

020 3764 2341

MEDiSTRAVA Consulting (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 autoimmune diseases and cancer. 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).

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 continues to explore options that would enable the development of SRA737 to advance.

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

 

Full year results for the 12 months ended 30 June 2021

CHAIRMAN’S AND CEO’S STATEMENT

Sareum continues to make progress advancing its proprietary, selective dual tyrosine kinase 2 (“TYK2”) / Janus kinase 1 (“JAK1”) inhibitors, SDC-1801 and SDC-1802, through preclinical development.

We are pleased to report that we are approaching an important milestone with SDC-1801, the start of human clinical development, targeting autoimmune diseases.

As noted in the Company’s Trading Update of 19 August 2021, we expect to complete the toxicology studies required for this phase of the preclinical programme for SDC-1801 by the end of 2021 and have initiated the process to manufacture drug product for clinical trials.

We made the decision to develop a capsule formulation of SDC-1801 for these first-in-human trials rather than orally dosed solutions or suspensions, which requires additional time, but the Board believes will add value to the programme and remove the need to develop capsules at a later stage.

We have appointed consultants to advise on the design of these clinical trials, which will form a key element of the exploratory Clinical Trial Application (“CTA”) we aim to file. The filing of this CTA is now targeted for mid-2022 to allow us to complete the necessary work. The CTA approval is a key step to allow the first human studies with SDC-1801 to begin shortly thereafter, subject also to drug product supply and additional funding.

In addition, we were delighted to receive grant funding from the UK government in late 2020 to investigate SDC-1801 as a potential treatment for the severe respiratory symptoms of Covid-19. We have since completed the research programme and generated encouraging preliminary results. These results in infected lung cells and in vivo disease models demonstrate that SDC-1801 reduces levels of key inflammatory agents known to play a role in the serious and potentially life-threatening hyper-inflammatory response that affects some Covid-19 patients.

We are now considering how we might make use of the UK government’s AGILE clinical trial platform, or other equivalent programmes, to providing funding and support for Phase 1 trials with SDC-1801 for Covid-19 applications and potentially fast-track its development. The timing and design of these clinical trials will be determined following consultations with experts in the field.

It is evident that that there is still a clear need for new therapies to treat severe respiratory inflammation arising from viral infections such as Covid-19 despite the success of the UK vaccination programme and the availability of vaccines around the world. With TYK2 acknowledged as a key therapeutic target for severe Covid-19 in an article published in December 2020 in the leading scientific journal, Nature*, we believe that SDC-1801 could have a role to play in this area in the future and we look forward to updating shareholders on further progress.   

Turning to our licensed pipeline, we have been encouraged by events occurring at Sierra Oncology, Inc. (“Sierra”) regarding SRA737, a clinical-stage inhibitor of Checkpoint Kinase 1 (“Chk1”), in which Sareum has an economic interest.

We believe that the amended licensing deal between Sierra and CRT Pioneer Fund LP (“CPF”) on SRA737 signed in November 2020 represents a key step in restarting the clinical development of this promising candidate. Further, Sierra noted that SRA737 may have potential in combination with SRA515, a novel BET inhibitor it in-licensed from AstraZeneca in August 2021 and now anticipates that it could begin combination studies including SRA737 in the first half of 2022. The dosing of the first patient with SRA737 in one of these clinical trials would trigger a US$2.0m milestone payment from Sierra, of which Sareum would receive a 27.5% share equating to approximately $0.55m. We look forward to further updates from Sierra.

In terms of business development, we are continuing to keep potential partners informed of our progress with a view to securing commercial licences for our TYK2/JAK1 programmes that balance cost and risk with maximising shareholder value. We will, as usual, keep shareholders updated in this regard as appropriate.

*Pairo-Castineira, E. et al. Genetic mechanisms of critical illness in COVID-19. Nature. 2021 Mar;591(7848):92-98. doi: 10.1038/s41586-020-03065-y. Epub 2020 Dec 11.

PROGRAMME UPDATES

SDC-1801 (autoimmune diseases, such as psoriasis, lupus, inflammatory bowel disease, rheumatoid arthritis, etc)

Sareum is nearing the completion of preclinical development with its novel oral TYK2/JAK1 inhibitor SDC-1801 and is conducting the final set of toxicology and safety studies. Consultants have been appointed to advise on the design of Phase 1 clinical trials, and this design will form a key element of the exploratory Clinical Trial Application (“CTA”) for SDC-1801.

A robust manufacturing route has been developed to produce the SDC-1801 active ingredient (drug substance) under Good Manufacturing Practice (“GMP”) conditions, and a specialist Contract Manufacturing Organisation has been appointed to provide GMP drug product for clinical trials.

SDC-1801 drug product is being developed as a formulation in capsules, rather than the orally dosed solutions or suspensions that are often used in Phase 1 clinical trials. While development of a capsule-based drug product requires additional time at this stage, the Board believes it will add value to the programme by removing the need to develop capsules at a later stage, making the programme more attractive to potential development partners.

The time needed to produce drug product in capsule form, combined with the effects of Covid-19 being experienced by several of our contracting companies, has meant that CTA filing is now expected in mid-2022. The first clinical trials are anticipated to begin shortly thereafter, subject to gaining the requisite approval, drug product supply and additional funding. These studies would investigate the safety of SDC-1801 in healthy volunteers during which time the Company will assess the initial indications for further study.

During the period, Sareum noted that encouraging data had been reported from preclinical studies with its TYK2/JAK1 inhibitors in disease models of systemic lupus erythematosus, an autoimmune disease with significant unmet need. These studies were conducted by Sareum’s co-development partner SRI International under a US Department of Defense grant and published on the website of the Defense Technical Information Center.

SDC-1801 (severe phase Covid-19)

Sareum began its Covid-19 programme with SDC-1801 in December 2020 following the award of a £0.17m grant by UK Research & Innovation (“UKRI”) to investigate whether SDC-1801 can down-regulate or block the TYK2/JAK1-mediated Interferon Type 1 pathway in cells infected with SARS-CoV-2. It has been observed that this pathway is over-active in severe Covid-19 patients and this can lead to life-threatening Acute Respiratory Distress Syndrome (“ARDS”).

The six-month project was completed on schedule, generating promising results. The project found that SDC-1801 reduced the levels of cytokines associated with ARDS in human lung cells infected with SARS-CoV-2 and demonstrated a profile that was superior to the anti-inflammatory steroid dexamethasone and similar to baricitinib, a JAK1/JAK2 inhibitor.

Furthermore, results from in-vivo studies supported the initial cellular results and provide strong evidence that expression of Type 1 interferons (IFNa and IFNb) is reduced by SDC-1801 treatment in a dose-responsive manner.

An increase in viral load is a potential concern when some anti-inflammatory agents are used to dampen down an over-active immune response; however, these studies also showed that viral loads did not increase after SDC-1801 administration, indicating that increased SARS-CoV-2 virus levels should not be an issue in any clinical studies of SDC-1801.

The Company aims to commence Phase 1 clinical trials for SDC-1801 in mid-2022, subject to successful completion of the ongoing preclinical toxicology studies, receipt of GMP drug product, gaining the requisite approval and financing.

The design and timing of the clinical trials for Covid-19 applications will be determined following consultations with experts in the field. The trial may be eligible for further UK government funding from the recently launched AGILE clinical development platform, or equivalent programmes, which have been established to fund Phase 1 trials and fast-track the development of potentially ground-breaking Covid-19 treatments.

SDC-1802 (cancer)

Sareum continues to advance the preclinical development of an oral formulation of SDC-1802 and has designed and initiated translational studies to define the optimal cancer application prior to completing toxicology and manufacturing studies.

Intellectual Property

The Company had two new US patents granted during 2021 (in January and September) that reinforce the patent protection for SDC-1802 and its use in treating certain cancers (including pancreatic, colorectal and kidney cancers, melanoma, and B-cell lymphoma) by inhibiting TYK2 kinase.

Additionally, a patent application describing a number of crystalline forms of a TYK2 inhibitor for medicinal applications, filed by Sareum in April 2020, was published on 14 October 2021. This type of patent is standard pharmaceutical industry practice and an important step to fully protect the intellectual property surrounding the Company’s research programmes and to extend the life span of its patent portfolio.

LICENSED PROGRAMME

SRA737 (cancer)

SRA737, a potent, highly selective, orally bioavailable small molecule Chk1 inhibitor, is licensed to Sierra Oncology. SRA737 has shown positive preliminary safety and efficacy data in combination with low-dose gemcitabine (“LDG”) in a broad Phase 1/2 clinical development programme in solid cancers, particularly anogenital cancer, as well as very promising results in preclinical studies in combination with LDG and an immune checkpoint inhibitor.

Development of SRA737 has been on hold since the second half of 2019 as Sierra prioritised its resources on the development of its Phase 3 candidate momelotinib. Since then, Sierra has been exploring options to support the continued development of SRA737 and has made several disclosures that point to future opportunities for advancing this programme internally.

In November 2020, Sierra and CPF agreed an amendment to their original 2016 licence agreement (the “Licence Agreement”) that slightly reduces the aggregate outstanding milestone payments payable by Sierra from up to $319.5m to up to $290.0m.  The amendment also reduced potential near-term payments from Sierra and now includes a milestone payment of $2.0m upon the dosing of the first patient in the next clinical trial of SRA737.  Post the amendment, Sareum continues to be eligible for 27.5% of the economics of the Licence Agreement.

Encouragingly, in August 2021, Sierra announced the in-licensing of the BET inhibitor AZD5153 (now known as SRA515) from AstraZeneca and noted potential combinations with SRA737 as a possible pipeline expansion opportunity. In September 2021, Sierra provided an update that referred to the initiation of additional clinical studies with pipeline agents including SRA737 in other haematologic and solid tumour indications in the first half of 2022. Specifically, reference was made to a potential role for SRA737 in combination studies in solid tumours, including pancreatic cancer, where patients have become resistant to PARP inhibitors.

Sareum continues to believe that, based on preclinical and early clinical data, SRA737 holds great promise for the treatment of cancer, particularly in combination settings, and that that the amended licensing agreement and update regarding SRA515 could expedite the advancement of the SRA737 programme.

Sareum will provide updates on progress as and when Sierra makes further disclosures in relation to the development of SRA737.

IMPACT OF COVID-19 ON OPERATIONS

Restrictions from the pandemic and knock-on effects have impacted on the Company’s network of Contract Research Organisations, with lead times increasing for new experiments. This has caused some delays to the conduct of some of the final preclinical studies the Company is required to complete with SDC-1801 prior to CTA filing.

FINANCIAL REVIEW

Sareum ended the full year to 30 June 2021 with a robust cash position following two subscriptions by a high-net-worth individual that raised £2.37m before expenses in June 2021.

As a result, cash at bank was £2.7m as of 30 June 2021 (£1.3m as at 31 December 2020; £1.8m as at 30 June 2020).

Post period-end (in July and August 2021), the Company raised a further £2.18m (before expenses) through share subscriptions by two additional high net worth individuals plus an exercise of warrants, bringing the total raised to approximately £4.6m to fund the further development of SDC-1801 and SDC-1802. Cash at bank was £4.4m as at 30 September 2021.

The Company also received an R&D tax credit of £0.13m in January 2021 and expects to receive £0.22m in R&D tax credit in January 2022.

Loss on ordinary activities (after taxation) for the year ended 30 June 2021 was £1.5m (2020: loss of £0.99m), reflecting the increased R&D expenditure required for preclinical development.

Salary Deferral Scheme

The Salary Deferral Scheme announced by the Company on 17 December 2019 and updated on 1 July 2020 ended in August 2021 with a total of £0.16m, representing all amounts outstanding, being settled in cash. This follows the significant c.£4.6m improvement in the Company’s financial position arising from the share subscriptions and warrant exercises between June and August.

OUTLOOK

Sareum continues to advance the preclinical development of its proprietary dual TYK2/JAK1 inhibitor programmes SDC-1801 and SDC-1802, supported by a robust cash balance following the recent financing events.

The preclinical programme for SDC-1801 is nearly complete, and an exploratory CTA to gain approval to start first-in-human trials is expected to be submitted in mid-2022, which could enable first clinical trials to begin shortly thereafter if the requisite approval, drug product supply and further funding is secured. Achieving these milestones would mark a significant step forward for the Company.

The Company is also in discussions around the clinical development of SDC-1801 in Covid-19 and is considering the possibility of applying for further UK government funding from the recently announced AGILE clinical development platform to advance the programme into the clinic.

Regarding SRA737, we continue to monitor Sierra’s activities as it explores clinical settings for the future development of this novel compound. We are encouraged by the recent disclosures Sierra has made and confident that these will enable the SRA737 programme to advance, with the potential for new clinical trials including SRA737 to start in the first half of 2022. We are following this with great interest and will provide further updates on this programme when information becomes available.

Overall, we are looking forward with optimism to the remainder of 2021 and 2022, during which time we expect to report on continued progress with our proprietary programmes, in particular the advancement of SDC-1801 into the clinic.

In addition, we continue to deploy our funds to advance our TYK2/JAK1 programmes and build a robust data package to support ongoing partnering activities for these differentiated assets. For both 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.

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

We would like to thank our shareholders, suppliers, contractors and other stakeholders for their continued support and look forward to providing further updates on progress as we move forward in 2021 and 2022.

 

Dr Stephen Parker                                                                                           Dr Tim Mitchell

Chairman                                                                                                            Chief Executive Officer