Interim Results

Synairgen plc

('Synairgen' or the 'Company')

Interim results for the six months ended 30 June 2024

Southampton, UK - 26 September 2024: Synairgen plc (LSE: SNG), the respiratory company developing SNG001, an investigational formulation for inhalation containing the immunomodulatory broad-spectrum antiviral protein interferon beta, today announces its unaudited interim results for the six months ended 30 June 2024.

Highlights (including post period-end)

Operational 

·    Designed Phase 2 trial to assess SNG001 in the high-risk group of mechanically ventilated patients.

·    Worked with third parties to optimise aerosol delivery of SNG001 into ventilator circuits, and to utilise diagnostic technology to select patients with higher viral loads in clinical trials. 

·    Engagement with a specialised CRO to support the planned Phase 2 trial, and established a steering committee including key UK and US intensive care experts.

·    Appointment of Mark Parry-Billings as Chairman, effective post AGM on 10 October.

Financial

·    Cash and deposit balances of £8.6 million at 30 June 2024 (30 June 2023: £14.6 million; 31 December 2023: £12.0 million).

·    Loss before tax for the six months ended 30 June 2024 was £3.7 million (30 June 2023: £5.2 million loss).

o  Research and development expenditure for the six months ended 30 June 2024 was £2.5 million (30 June 2023: £3.5 million) as expenditure on clinical trials and manufacturing activities have reduced.

o  Administrative expenses for the six months ended 30 June 2024 were £1.4 million (30 June 2023: £2.1 million), with the reduction driven by cost control measures across all operations.

·    Research and development tax credit decreased from £0.5 million in H1 2023 to £0.4 million in H1 2024 with marginally reduced qualifying expenditure and lower tax credit rates.

Richard Marsden, CEO of Synairgen, commented: "Today we are pleased to be able to provide further details on our strategy for the months ahead, as we prepare to conduct a large Phase 2 trial of SNG001 in mechanically ventilated patients. Having closely analysed various routes forward, we are confident that our focus on these high-risk patients is optimal from both a clinical and commercial perspective. To initiate this sizeable trial, additional funding will be required, and we will keep investors updated on plans as they finalise."

For further enquiries, please contact: 

Synairgen plc 

[email protected] 

Tel: + 44 (0) 23 8051 2800 

Cavendish Capital Markets Limited (NOMAD and Joint Broker)

Geoff Nash, Camilla Hume, Trisyia Jamaludin (Corporate Finance)

Sunila de Silva (ECM)

Nigel Birks (Life Science Specialist Sales) 

Tel: + 44 (0) 20 7220 0500 

Deutsche Numis (Joint Broker) 

Freddie Barnfield, Duncan Monteith, Euan Brown 

Tel: + 44 (0) 20 7260 1000 

ICR Consilium (Financial Media and Investor Relations) 

Mary-Jane Elliott, Namrata Taak, Lucy Featherstone 

[email protected] 

Tel: +44 (0) 20 3709 5700 

Notes for Editors 

Synairgen is a UK-based respiratory company focused on the development of SNG001 (inhaled interferon beta) as potentially the first host-targeted, broad-spectrum antiviral treatment delivered directly into the lungs to treat severe viral lung infections.

Millions of people are hospitalised every year due to viral lung infections and there are currently no approved antiviral therapies for the majority of patients, some of whom become critically ill to the point where they require intubation and mechanical ventilation. Synairgen is developing SNG001 to address this need.

Founded by University of Southampton Professors Sir Stephen Holgate, Donna Davies and Ratko Djukanovic in 2003, Synairgen is quoted on AIM (LSE: SNG). For more information about Synairgen, please see www.synairgen.com. 

OPERATIONAL REVIEW

SNG001 is a broad-spectrum inhaled antiviral being developed by Synairgen to treat patients with severe viral lung infections; it contains the active ingredient interferon beta, an immune defence protein, which plays a vital role in response to infection by various viruses. 

Some people with viral respiratory infection mount poor interferon driven antiviral responses due to risk factors such as older age, or certain comorbidities. Further to this, some viruses disrupt interferon driven antiviral response pathways, facilitating viral replication, which can result in severe infection. SNG001 is being developed to boost or restore antiviral defences at the site of viral infection in the lungs. 

In the first six months of the year the Company has made substantial progress in preparation for a large Phase 2 trial to investigate SNG001 in mechanically ventilated patients infected with a range of respiratory viruses. This has included collaboration with leading respiratory and intensive care experts to characterise the clinical need, confirming commercial viability, designing the trial, assessing feasibility of trial delivery, and working with external parties on technologies that will be used in the trial. 

At the same time, Synairgen has determined the financing plan, as previously announced, and intends to raise additional funds for the trial. Any fundraise will be structured, inter alia, to ensure existing investors are able to participate, subject to demand. Further details will be provided in due course.

Addressing the need for a new treatment for mechanically ventilated patients

Respiratory viruses, including influenza, respiratory syncytial virus (RSV), rhinovirus, coronaviruses (including SARS-CoV-2), adenovirus and parainfluenza, are the cause of some of the most common infections that affect humans. Less than 1% of respiratory virus infections lead to hospitalization. Patients hospitalised due to a respiratory virus infection have a ~15%^[1] risk of disease progression that requires admission to an intensive care unit (ICU). Approximately half of the patients admitted to the ICU will require intubation and mechanical ventilation[2]. Mortality in ventilated patients is high (25%-40%^[3][4]), with older age and higher viral loads associated with higher mortality. Antiviral therapeutic options are very limited, resulting in high medical need.

Priority patient group: Mechanically ventilated patients

The cost of treating patients with respiratory viral infections was studied intensely during the pandemic.  In the US, the average cost of hospitalisation (among surviving patients) caused by SARS-CoV-2 and requiring invasive mechanical ventilation was ~$60k compared with ~$21k for ICU admission alone[5]. With limited therapeutics available today, a drug that reduces mortality and/or shortens the duration of ventilation would fulfil a significant unmet need in critical care.

Medium priority group: Ward based patients

Synairgen has assessed the commercial viability of SNG001 in patients recently admitted to hospital, following its findings from the SPRINTER trial, with the aim of using SNG001 in these patients to prevent disease progression, ICU admission and death. A commercial precedent for treating these patients has been established through the use of remdesivir to treat SARS-CoV-2 infections.  The challenge in conducting clinical research in this population is the size of the trials required to achieve statistically significant results, and ultimately to gain approval from regulatory agencies. By way of example, AstraZeneca is conducting a 2,900 patient trial of an anti-inflammatory drug (tozorakimab), targeting patients with viral respiratory infections^[6]. Synairgen believes this scale of study is beyond its reach at this stage, but could be a natural strategic line extension.

However, Synairgen is participating in the UNIVERSAL non interventional trial aimed at identifying patient characteristics that would enable a future trial to focus on patients with higher risk of disease progression. Findings from UNIVERSAL could help enrich the Company's next ward-based clinical trial in high-risk patients, reducing trial size and making its delivery more time- and cost-efficient whilst also strengthening the commercial case.

Trial of SNG001 in ventilated patients

Due to the high mortality rate in ventilated patients, it is possible to conduct a Phase 2 trial with mortality as the primary endpoint, which can be delivered in a financially and time effective manner through the use of an interim analysis with futility test.

The trial will recruit patients with higher virus loads, and who are either over the age of 50 or immunocompromised; these characteristics are associated with higher mortality risk. 

The trial will use mortality as its primary endpoint, while assessing a variety of other important clinical, virological and biomarker endpoints.

Use of technology in SNG001

Effective drug delivery to the lungs in the complex clinical setting of critically ill patients can be challenging. In close collaboration with Aerogen, whose vibrating mesh nebuliser (the Aerogen Solo^®) has been used in previous clinical trials of SNG001, Synairgen has assessed various aerosol delivery parameters and settings to optimise aerosol delivery of SNG001 in ventilator circuits.

The Company has also worked closely with a diagnostic company to enable selection of patients with higher virus loads. Many patients may only have trace amounts of virus in their lungs which, although detectable, may not be the primary cause of their need to be ventilated. Such patients would be less likely to benefit from treatment with SNG001 and hence will be excluded from the study. Novel use of this available technology will allow real-time virus load assessment and help focus the study on patients who may benefit the most from the treatment.

Trial delivery

Synairgen's interactions with many academic experts in the field of respiratory diseases and intensive care medicine show that there is significant interest amongst investigators both in the UK and the US to assess SNG001 in ventilated patients as there are very limited treatment options for viral pneumonia and a high mortality rate. During the period Synairgen has initiated the essential trial set-up activities, including engagement with a specialised global clinical research organisation (CRO) to work alongside Synairgen's in-house development team. This has included a robust identification process of appropriately experienced clinical sites to support study delivery, as well as the necessary protocol and study documentation preparation and planning of key regulatory agency interactions.

Additionally, Synairgen has also established a steering committee including key UK and US intensive care experts to help optimize study design and delivery, as well as an independent data review committee that will perform data reviews throughout the study, including the interim analysis.

Board updates

As announced on 18 September, Simon Shaw will retire as Chairman at the conclusion of the forthcoming Annual General Meeting on 10 October, and will be succeeded by Mark Parry-Billings, latterly Global Head of Drug Development at Chiesi Farmaceutici S.p.A.

Outlook

Synairgen is now able to capitalise on a wealth of data that it has generated to date, including the safety data from more than 750 patients, and the data from the patients we have treated who were most ill, or at highest risk, due to respiratory viral infection. Our priority population, which is ICU patients receiving mechanical ventilation, face high mortality rates and an extremely limited range of antiviral therapies. Therefore, the Board and management team of Synairgen, who have stress tested this plan over a significant time, are excited to pursue this strategy for the potential benefit of patients, which, if successful, will provide significant value for our shareholders.

FINANCIAL REVIEW

Statement of Comprehensive Income

The loss from operations for the six months ended 30 June 2024 (H1 2024) was £3.9 million (six months ended 30 June 2023 (H1 2023): £5.5 million loss; year ended 31 December 2023 (FY 2023): £10.3 million loss) with research and development expenditure amounting to £2.5 million (H1 2023: £3.5 million; FY 2023: £6.5 million) and other administrative expenses £1.4 million (H1 2023: £2.1 million; FY 2023: £3.8 million).

The £1.0 million reduction in research and development expenditure in H1 is attributable to the lower expenditure on clinical trials and manufacturing activities.

The £0.7 million reduction in other administrative expenditure in H1 2024 is driven predominantly by reduced activity in commercialisation, medical affairs and corporate communications, alongside cost control measures across all operations.

The research and development tax credit decreased from £0.5 million in H1 2023 to £0.4 million in H1 2024 on account of the reduced qualifying expenditure and the reduction in the small or medium enterprises (SME) R&D scheme rates effective as of 1 April 2024.

The loss after tax for H1 2024 was £3.3 million (H1 2023: £4.7 million; FY 2023: £8.4 million) and the basic loss per share was 1.62p (H1 2023: 2.36p loss; FY 2023: 4.18p loss).

Statement of Financial Position and Cash Flows

At 30 June 2024, net assets amounted to £9.6 million (30 June 2023: £16.0 million; 31 December 2023: £12.7 million), including cash and deposit balances of £8.6 million (30 June 2023: £14.6 million; 31 December 2023: £12.0 million).

The principal elements of the £3.4 million reduction in cash and deposit balances during H1 2024 (H1 2023: £5.1 million reduction; FY 2023: £7.7 million reduction) were:

·    Net cash used in operations £3.7 million (H1 2023: £5.3 million outflow; FY 2023: £8.2 million outflow);

·    Research and development tax credits received of £nil (H1 2023: £nil; FY 2023: £2.4 million); and

·    Interest received £0.3 million (H1 2023: £0.3 million; FY 2023: £0.6 million).

·    Bank deposits of £1.5 million matured in the period to 30 June 2024, resulting in an equivalent cash inflow (H1 2023: net cash outflow from deposits of £0.25m; FY 2023: net cash inflow from deposits of £2.25m)

The other significant changes in the statement of financial position were:

·    Current tax receivable at 30 June 2024 of £1.7 million (30 June 2023: £2.9 million; 31 December 2023: £1.3 million) on account of the lower research and development tax credit receivable.

·    Trade and other receivables at 30 June 2024 of £0.3 million (30 June 2023: £1.1 million; 31 December 2023: £0.8 million), due to lower levels of prepayments and recoverable VAT, in-line with reduced operating expenditure.

·    Trade and other payables at 30 June 2024 of £1.1 million (30 June 2023: £2.7 million; 31 December 2023: £1.6 million) in line with the reduction in the level of operating expenditure.

Going Concern

As disclosed in Note 1, the Company has indicated its intention to raise finance for a Phase 2 clinical trial in mechanically ventilated patients as a result of a respiratory viral infection. If this finance is not raised and the Phase 2 clinical trial does not commence, a fundraise will still be required by Q1 2026. Regardless of the outcome of these activities, which are uncertain, the Company's available resources are sufficient to cover existing committed costs to at least 31 December 2025, being a period of at least twelve months from the date of this report and, for this reason, the financial statements have been prepared on a going concern basis.

Consolidated Statement of Comprehensive Income

for the 6 months ended 30 June 2024

Consolidated Statement of Changes in Equity

for the 6 months ended 30 June 2024

Consolidated Statement of Financial Position

as at 30 June 2024

Consolidated Statement of Cash Flows

for the 6 months ended 30 June 2024

Notes to the Interim Financial Information

for the six months ended 30 June 2024

1.         Basis of preparation

Basis of accounting

The condensed financial statements have been prepared using accounting policies consistent with international accounting standards. While the financial figures included in this half-yearly report have been computed in accordance with international accounting standards applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.  They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 December 2023 Annual Report and Financial Statements. The financial information for the half years ended 30 June 2024 and 30 June 2023 does not constitute full financial statements and both periods are unaudited.

The accounting policies applied in the preparation of this interim financial information are consistent with those used in the financial statements for the year ended 31 December 2023 and those expected to apply for the financial year to 31 December 2024. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Financial information

The financial information for the year ended 31 December 2023 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 December 2023 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for the year ended 31 December 2023 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Financial information is published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial information, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the financial information contained therein.

Going Concern

The directors have prepared financial forecasts to estimate the likely cash requirements of the Company over the period to 31 December 2025, given its stage of development and lack of recurring revenues. In preparing these financial forecasts, the directors have made certain assumptions with regards to the timing and amount of future expenditure over which they have control. The directors have taken a prudent view in preparing these forecasts.

The directors have identified that the Company will need to raise further funds during 2024 in order to conduct the planned Phase 2 clinical trial in mechanically ventilated patients. The ability of the Company to secure a fund raise in 2024 cannot be guaranteed, therefore the directors have prepared an alternative forecast which maintains a budget for further pre-clinical preparatory work that would produce data to support a fund raise, whilst significantly reducing research and development, and administrative spend. Should this alternative forecast be required, the directors are confident of achieving savings in expenditure within their control, resulting in the Company having sufficient resources until 31 December 2025 ahead of requiring a further fund raise by Q1 2026, whilst maintaining the principal activity of the Company.

 In addition, the directors have considered the sensitivity of the financial forecasts to changes in key assumptions, including, among others, potential cost overruns within anticipated spend. After due consideration of these forecasts and current cash resources, the directors consider that the Company has adequate financial resources to continue in operational existence for the foreseeable future (being a period of at least twelve months from the date of this report) and, for this reason, the financial statements have been prepared on a going concern basis.

Notes to the Interim Financial Information

for the six months ended 30 June 2024 (continued)

1.         Basis of preparation (continued)

Approval of financial information

The 30 June 2024 interim financial information was approved by a committee of the Board of Directors on 25 September 2024.

2.         Tax credit

The tax credit of £400,000 (six months ended 30 June 2023: £466,000; year ended 31 December 2023: £1,249,000) comprises an estimate of the research and development tax credit receivable in respect of the current period.

The deferred tax assets have not been recognized as there is uncertainty regarding when suitable future profits against which to offset the accumulated tax losses will arise. There is no expiration date for the accumulated tax losses.

3.         Loss per ordinary share

The loss attributable to shareholders and the weighted average number of ordinary shares for the purposes of calculating the diluted loss per ordinary share are identical to those used for basic loss per share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore antidilutive. At 30 June 2024 there were 15,977,102 options outstanding (30 June 2023: 18,119,156 options outstanding; 31 December 2023: 18,940,446 options outstanding).

INDEPENDENT REVIEW REPORT TO SYNAIRGEN PLC

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 is not prepared, in all material respects, in accordance with the London Stock Exchange AIM Rules for Companies.

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows and the related notes 1 to 3.

Basis for conclusion

We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410 (Revised)"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has not been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the London Stock Exchange AIM Rules for Companies which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange AIM Rules for Companies for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP

Chartered Accountants

Southampton, UK

Date: 25 September 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).