REG - Sareum Holdings PLC - Final Results for the Year Ended 30 June 2023
09/10/2023 07:00
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RNS Number : 0312P Sareum Holdings PLC 09 October 2023
Sareum Holdings PLC
("Sareum" or the "Company")
Final Results for the Year Ended 30 June 2023
Cambridge, UK, 9 October 2023 - Sareum Holdings plc (AIM: SAR), a
biotechnology company developing next generation kinase inhibitors for
autoimmune disease and cancer, today announces its audited financial results
for the year ended 30 June 2023.
Additionally, Sareum announces that the Annual Report detailing these
financial results will be made available and posted in the coming weeks.
Sareum also provides a broader update on operational activities and pipeline
progress.
OPERATIONAL HIGHLIGHTS - INCLUDING POST-PERIOD UPDATES
SDC-1801 (autoimmune disease)
· SDC-1801 is a TYK2/JAK1 inhibitor being developed as a potential
new therapeutic for a range of autoimmune diseases with an initial focus on
psoriasis, an autoimmune condition affecting the skin.
· A Phase 1a clinical trial evaluating SDC-1801 in healthy subjects
was initiated in May 2023, and is progressing well at a specialist clinical
unit in Melbourne, Australia.
· In September, after the period end, Sareum commenced dosing in
the multiple ascending dose (MAD) escalation phase of the Phase 1a trial. This
followed approval by the safety review committee granted upon review of
preliminary data generated from the initial three cohorts in the single
ascending dose (SAD) part of the study.
· Full safety data from the Phase 1a trial are expected to be
available during the first half of 2024 and, provided satisfactory results are
obtained and subject to financing and regulatory and recruitment preparations,
the Company plans to initiate a Phase 1b clinical study, aiming to recruit up
to 24 psoriasis patients. This study is expected to be completed before the
end of 2024.
· First patent relating to SDC-1801 was granted by the China
National Intellectual Property Administration, safeguarding the use of
SDC-1801 for medical applications treating inflammatory or immune disorders.
SDC-1802 (cancer immunotherapy)
· Sareum continues to work on the translational studies needed to
support its cancer immunotherapy candidate, SDC-1802, defining the optimal
cancer application prior to completing toxicology and manufacturing studies.
· New patent granted by the United States Patent and Trademark
Office (USPTO) covering the treatment of autoimmune diseases with SDC-1802 and
several analogues and extending protection for this compound beyond
immuno-oncology.
SRA737 (cancer)
· Sierra Oncology, Inc, a subsidiary of GSK plc, completed the
return of the Clinical Study Reports and other associated documents and data
related to SRA737 to Sareum's co-development partner, the CRT Pioneer Fund LP
("CPF").
· CPF is taking the lead in evaluating potential further
development opportunities for SRA737 and further updates will be provided as
soon as possible.
FINANCIAL HIGHLIGHTS
· The loss for the year to 30 June 2023 was £3.2 million after
tax, (2022: £2.2 million), in line with market expectations and reflecting
the increased costs associated with setting up and commencing clinical studies
with SDC-1801.
· Sareum had a cash position of £1.0 million as at 30 June 2023
(cash of £2.9 million as at 31 December 2022 and £4.3 million as at 30 June
2022).
· As announced on 3 August 2023, after the period end, Sareum
agreed terms on an Equity Prepayment Facility (the "Facility") of up to £5.0
million with RiverFort Global Opportunities PCC Ltd ("RiverFort"). The Company
received an initial deposit of £2.0 million, net of associated costs, on 4
August 2023.
· The Company intends to use the Facility, if fully drawn, together
with the receipt of anticipated tax incentives to the amount of £1.6 million
(of which £0.4m was received in Australia post period end), to complete the
Phase 1a/b clinical development of the Company's lead candidate SDC-1801,
which is expected to be a primary catalyst for driving shareholder value, and
for general working capital to Q4 2024. With the current and anticipated
financing mechanisms in place, the Company is positioned to ensure the
completion of the Phase 1a study and to support subsequent developments.
Dr Tim Mitchell, CEO of Sareum, commented:
"We are increasingly optimistic about the potential of TYK2/JAK1 inhibitors to
address autoimmune disease and we remain fully focused on progressing our lead
programme, SDC-1801, through the ongoing Phase 1 study underway in Australia.
"The funds raised as part of the RiverFort facility provide a clear runway
allowing us to focus on advancing this promising asset through Phase 1 studies
and we look forward to having full safety data in the first half of 2024,
potentially allowing us to move towards an important Phase 1b study in
psoriasis patients which will focus more on efficacy.
"With our secured financing and anticipated resources, we believe we're well
positioned to complete the ongoing Phase 1a and subsequently advance into the
Phase 1b study.
"This progress, alongside growing scientific and commercial validation in the
TYK2/JAK1 space, supports our continued confidence in this asset.
"We're also optimistic about the opportunity for SDC-1802 in immuno-oncology
and continue to believe that SRA737 has great potential for the treatment of
cancer."
For further information, please contact:
Sareum Holdings plc
Tim Mitchell, CEO 01223 497700
Lauren Williams, Head of Investor Relations ir@sareum.co.uk
Strand Hanson Limited (Nominated Adviser)
James Dance / James Bellman 020 7409 3494
Peel Hunt LLP (Joint Corporate Broker)
James Steel / Patrick Birkholm 020 7418 8900
Hybridan LLP (Joint Corporate Broker)
Claire Noyce 020 3764 2341
ICR Consilium (Financial PR)
Jessica Hodgson / Davide Salvi / Stella Lempidaki 020 3709 5700
About Sareum
Sareum Holdings (AIM:SAR) is a clinical-stage biotechnology company developing
next generation kinase inhibitors for autoimmune disease and cancer.
The Company is focused on developing next generation small molecules which
modify the activity of the JAK kinase family and have best-in-class potential.
Its lead candidate, SDC-1801, simultaneously inhibits TYK2 and JAK1. SDC-1801
is a potential treatment for a range of autoimmune diseases and has entered
Phase 1a/b clinical development with an initial focus on psoriasis.
Sareum has an economic interest in SRA737, a clinical-stage Chk1 inhibitor
which it originally developed in collaboration with several Cancer Research
UK-related organisations. SRA737 has shown promising safety and efficacy in
two Phase 1/2 clinical trials.
Sareum is also developing SDC-1802, a TYK2/JAK1 inhibitor with a potential
application for cancer immunotherapy.
Sareum Holdings plc is based in Cambridge, UK, and 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
(about:blank)
CHAIRMAN'S STATEMENT
Sareum is making good progress with its lead programme, SDC-1801, with a Phase
1a trial now underway in Australia.
The management team is convinced of the potential benefits that dual
inhibition of both TYK2 and JAK1 can offer to patients with autoimmune
diseases in terms of superior efficacy in comparison to other small molecule
approaches.
For the duration of this financial year, the team has been focused on
advancing the clinical development of SDC-1801. Despite an initial setback
with respect to Sareum's application to the UK's MHRA, management rapidly
pivoted and adapted its strategy, fulfilling the necessary steps to enable the
Phase 1a trial to be conducted in Australia.
Australia offers state-of-the-art research facilities, an efficient approval
process and generous tax incentives for companies undertaking research and
development, making it an attractive location for conducting clinical trials.
The Phase 1a trial of SDC-1801 started in May 2023 and is progressing well.
Following a review of the safety and pharmacokinetics data from the first
three cohorts in the SAD part of the study, MAD studies were initiated in
September after the period end. Sareum is on track to receive full safety data
from the Phase 1a trial during the first half of 2024. Subject to satisfactory
safety data, as well as financing, regulatory and recruitment considerations,
Sareum aims to move SDC-1801 into the Phase 1b part of the trial in psoriasis
patients as soon as possible thereafter.
Our second dual TYK2/JAK1 inhibitor, SDC-1802, holds significant potential in
cancer and autoimmune disease. Translational studies continue, in order to
define the optimal application prior to completing the necessary toxicology
and manufacturing preparatory work. We have been encouraged by the award of a
patent, in June 2023, by the United States Patent and Trademark Office
(USPTO), which extends the potential scope of this compound beyond
immuno-oncology.
We continue to be optimistic about the potential for SRA737, which has
demonstrated promising clinical and preclinical efficacy, particularly in
combination settings, in earlier studies conducted by Sierra Oncology. CPF is
taking the lead in evaluating the opportunity and next steps for this asset,
and we await further developments.
For now, the Company is focused on the encouraging clinical progress of our
lead programme, SDC-1801. The financing agreement with RiverFort, announced in
August 2023, provides us with a runway to complete the Phase 1 element of the
trial and we are excited to see this move forward.
COMPANY STRATEGY
Sareum is a clinical-stage small molecule drug development company which is
focused on advancing inhibitors of the JAK kinase family into clinical
development for autoimmune disease and cancer. It is led by a highly
experienced team with expertise in kinase inhibition and decades of experience
in R&D and public company management.
Sareum's pipeline is focused on TYK2/JAK1 inhibitors, which are involved in
signalling pathways that are deregulated in multiple autoimmune diseases.
Inhibition of TYK2 and JAK1 has the potential to yield a superior efficacy
compared with agents that block just one of these two kinases and with a
superior safety profile than "first generation" JAK family inhibitors that
also modulate JAK2 and JAK3.
Our approach is to discover and develop programmes to late preclinical or
early clinical stages before licensing or partnering.
The Company maintains a lean cost base with a small, experienced and
specialised team and using trusted third-party providers, to maximise its
return on investment.
PROGRAMME UPDATES
SDC-1801
SDC-1801 is a TYK2/JAK1 inhibitor being developed as a potential new
therapeutic for a range of autoimmune diseases with an initial focus on
psoriasis, an autoimmune condition affecting the skin.
TYK2/JAK1 inhibition has demonstrated benefits in restoring a healthy immune
system and has strong clinical validation in psoriasis and psoriatic
arthritis.
Psoriasis is an autoimmune dermatological condition affecting more than 125
million adults worldwide, with a market size for potential treatments
estimated to be worth US$27.0 billion. Sareum believes that TYK2/JAK1
inhibition offers the potential for increased efficacy in psoriasis, compared
with existing approved therapies.
Scientific and commercial interest in the application of TYK2/JAK1 inhibition
has been building recently. This momentum was underscored by the approval in
September 2022 of Sotyktu™ (deucravacitinib), from Bristol Myers Squibb, a
first-in-class, oral, selective, allosteric TYK2 inhibitor for the treatment
of adults with moderate-to-severe plaque psoriasis.
SDC-1801 is undergoing a Phase 1a clinical trial designed to investigate the
safety, tolerability, pharmacokinetics and pharmacodynamics of an oral
formulation of SDC-1801 in healthy subjects (trial ID ACTRN12623000416695p).
This is a randomised, placebo-controlled trial, with single and multiple
ascending oral dose studies, and a food effect study, which is taking place at
a clinical unit in Melbourne, Australia.
The single ascending dose (SAD) part of the trial was initiated in May and, in
September, Sareum confirmed after the period end that it had commenced dosing
the first subjects in the multiple ascending dose (MAD) part of the trial.
Dosing in the MAD part of the study followed approval by the safety review
committee based on preliminary data generated from the initial three cohorts
in the SAD part of the study. These were deemed satisfactory for the MAD part
of the study to commence, alongside continued dose escalation in the SAD part
of the study.
A food effect study, which will examine how the pharmacokinetic profile of
SDC-1801 changes when capsules are dosed with food, or following a fasting
period, is planned to commence in Q423 and is expected to report in early
2024.
Provided satisfactory safety data are obtained from the Phase 1a study and
subject to financing, regulatory and recruitment considerations, Sareum aims
to move SDC-1801 into the Phase 1b part of the trial in psoriasis patients as
soon as possible.
SDC-1802
SDC-1802 is a TYK2/JAK1 inhibitor being developed for cancer and cancer
immunotherapy applications.
Sareum continues to work on the translational studies needed to define the
optimal cancer application prior to completing toxicology and manufacturing
studies.
In June 2023, a patent was granted by the United States Patent and Trademark
Office (USPTO) covering the treatment of autoimmune diseases with SDC-1802 and
several analogues and extending protection for this compound beyond
immuno-oncology.
This strengthens the intellectual property protection around this molecule: in
April 2022, the Company was granted a patent protecting the SDC-1802 molecule
and pharmaceutical preparations thereof as a therapeutic to treat T-cell acute
lymphoblastic leukaemia (T-ALL - a cancer of a particular type of white blood
cell called a T lymphocyte) and other cancers that are dependent on TYK2
kinase for survival.
SRA737
SRA737 is a clinical-stage oral, selective Chk1 inhibitor that targets cancer
cell replication and DNA damage repair mechanisms.
The asset was originally developed by Sareum in collaboration with several
Cancer Research UK-related organisations, including CPF, with whom the Company
entered a co-development agreement in 2013. Under the terms of the agreement,
Sareum is entitled to a 27.5% share of any commercialisation revenues.
As announced in March 2023, Sierra Oncology, Inc, now a subsidiary of GSK plc,
has completed the return of the Clinical Study Reports and other associated
documents and data related to SRA737 to Sareum's co-development partner, the
CPF.
As the major partner, CPF is taking the lead in evaluating potential further
development opportunities for SRA737 and further updates will be provided as
and when appropriate.
Sierra reported positive preliminary efficacy and safety data in two clinical
trials evaluating it as a monotherapy and in combination with chemotherapy in
2019, and preclinical data have been reported that support the potential for
SRA737 in combination against hard-to-treat cancers.
We continue to believe that, based on preclinical and early clinical data,
SRA737 holds strong promise for the treatment of cancer, particularly in
combination settings and are confident in the potential of this molecule.
FINANCIAL REVIEW (INCLUDING POST PERIOD END EVENTS)
The loss for the year to 30 June 2023 was £3.2 million after tax (2022: £2.2
million), in line with market expectations and reflecting the increased costs
associated with setting up and commencing clinical studies with SDC-1801.
Sareum had a cash position of £1.0 million as at 30 June 2023 (cash of £2.9
million as at 31 December 2022 and £4.3 million as at 30 June 2022).
In August 2023, after the period end, Sareum agreed terms on an Equity
Prepayment Facility of up to £5.0 million with RiverFort. The Company
received an initial deposit of £2.0 million, net of associated costs, on 4
August 2023.
The Company intends to use the Facility, if fully drawn, together with the
receipt of anticipated tax credits to the amount of £1.6 million (of which
£0.4m was received from the Australian government post period end), to
complete the Phase 1a/b clinical development of the Company's lead candidate
SDC-1801, which is expected to be a primary catalyst for driving shareholder
value, and for general working capital to Q4 2024.
OUTLOOK
Sareum is focused on progressing the Phase 1 trial of its lead clinical
programme, SDC-1801. This trial moved into the MAD part of the Phase 1a trial
in August 2023 and dose escalation continues in the SAD.
Initial safety data from the Phase 1a trial are expected to be available in 1H
2024. Subject to satisfactory safety, additional funding and relevant
regulatory and recruitment preparations, we plan to commence a Phase 1b trial
of SDC-1801 in psoriasis patients shortly thereafter, with a readout from this
part of the study expected by the end of 2024.
The continued good progress of the Phase 1a trial and our supporting
preclinical work, combined with growing commercial and scientific momentum
building around the TYK2/JAK1 class, underpins our continued confidence around
the commercial potential for this molecule.
We continue to advance translational studies for SDC-1802, which we believe
has attractive potential in cancer immunotherapy.
The Board and management of Sareum continue to apply a rigorous approach to
capital allocation to the development of our assets, particularly in the
current challenging economic environment, and maintain a clear focus on
bringing these medicines to patients as efficiently as possible, while
maximising value for shareholders.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Note 2023 2022
£'000 £'000
CONTINUING OPERATIONS
Revenue - -
Administrative expenses (4,048) (2,577)
Share of loss of associates (18) (3)
-------------- --------------
OPERATING LOSS (4,066) (2,580)
Finance income 4 41 1
LOSS BEFORE TAXATION 5 (4,025) (2,579)
Taxation 6 833 407
LOSS FOR THE YEAR (3,192) (2,172)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (3,192) (2,172)
Loss attributable to owners of the parent (3,192) (2,172)
======== ========
Total comprehensive income attributable to owners of the parent (3,192) (2,172)
Basic and diluted loss per share expressed in pence per share 7 (4.7) (3.2)
The accompanying notes form part of these financial statements.
CONSOLIDATED BALANCE SHEET
30 JUNE 2023
Note 2023 2022
£'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 8 1 2
Investment in associate 9 46 23
47 25
CURRENT ASSETS
Trade and other receivables 10 979 500
Cash and cash equivalents 11 994 4,261
1,973 4,761
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12 (867) (455)
NET CURRENT ASSETS 1,106 4,306
NET ASSETS 1,153 4,331
SHAREHOLDERS' EQUITY
Called up share capital 15 851 851
Share premium 16 20,925 20,925
Share-based compensation reserve 16 325 325
Foreign exchange reserve 16 14 -
Retained earnings 16 (20,962) (17,770)
TOTAL EQUITY 1,153 4,331
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Called up share capital Share premium Share-based compensation reserve
£'000 £'000 £'000
Balance at 1 July 2021 833 17,235 362
Issue of share capital 18 3,690 -
Transfer for options exercised / expired - - -
Total comprehensive income - - (37)
Balance at 30 June 2022 851 20,925 325
Issue of share capital - - -
Total comprehensive income - - -
Transfer for options exercised / expired - - -
Balance at 30 June 2023 851 20,925 325
Foreign exchange reserve Retained earnings Total equity
£'000 £'000 £'000
Balance at 1 July 2021 - (15,635) 2,795
Issue of share capital - - 3,708
Transfer for options exercised / expired - 37 -
Total comprehensive income - (2,172) (2,172)
Balance at 30 June 2022 - (17,770) 4,331
Issue of share capital - - -
Transfer for options exercised / expired - - -
Arising on consolidation 14 - 14
Total comprehensive income - (3,192) (3,192)
Balance at 30 June 2023 14 (20,962) 1,153
The accompanying notes form part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Cash used in operations 19 (3,676) (2,349)
Tax received 409 218
Net cash outflow from operating activities (3,267) (2,131)
Cash flows from investing activities
Purchase of tangible fixed assets - (3)
Investment in associate (41) -
Interest received 41 1
Net cash inflow from investing activities - (2)
Cash flows from financing activities
Share issue - 3,708
Net cash inflow from financing activities - 3,708
------------- -------------
(Decrease)/increase in cash and cash equivalents (3,267) 1,575
Cash and cash equivalents at beginning of year 4,261 2,686
------------ ------------
Cash and cash equivalents at end of year 994 4,261
======= =======
The accompanying notes form part of these financial statements.
1. BASIS OF PREPARATION
The financial statements of Sareum Holdings plc ("the Company") have been
prepared in accordance with UK-adopted international accounting standards, and
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, with IFRIC interpretations. On 1
January 2022 the UK-adopted IAS and EU-adopted IFRS were identical. Since this
date timing differences in endorsement have arisen, however no amendments
would be required to these financial statements if they were prepared in
accordance with EU-adopted IFRS as at 30 June 2023.
The financial statements have been prepared under the historical cost
convention.
Going concern
The Group made losses after tax of £3.2 million (2022: £2.2 million), as
they continued to progress their research and development activities. These
activities, and the related expenditure, are in line with the budgets
previously set and are funded by regular cash investments.
The Directors consider that the cash held at the year-end, together with that
subsequently received and projected to be received, will be sufficient for the
Group to meet its forecast expenditure for at least one year from the date of
signing the financial statements. If there is a shortfall the Directors will
implement cost savings to ensure that the cash resources last for this period
of time.
For these reasons 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 and an
associate, together, "the Group") 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 subsidiary as if they formed a single entity. Inter-company
transactions and balances between group companies are eliminated on
consolidation.
2. ACCOUNTING POLICIES
The principal accounting policies applied are set out below.
Property, plant and equipment
Depreciation is provided on a straight-line basis over three years in order to
write off each asset over its estimated useful life.
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.
Pension contributions
The Group does not operate a pension scheme for the benefit of its employees
but instead makes contributions to their personal pension plans. The
contributions due for the period are charged to the profit and loss account.
Employee share schemes
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.
Research and development
Expenditure on research and development is written off in the year in which it
is incurred.
Research expenditure is written off in the period in which it is incurred.
Development expenditure incurred is capitalised as an intangible asset only
when all of the following criteria are met:
- It is technically feasible to complete the intangible asset so
that it will be available for use or sale;
- There is the intention to complete the intangible asset and use
or sell it;
- There is the ability to use or sell the intangible asset;
- The use or sale of the intangible asset will generate probable
future economic benefits;
- There are adequate technical, financial and other resources
available to complete the development and to use or sell the intangible asset;
and
- The expenditure attributable to the intangible asset during its
development can be measured reliably.
Expenditure that does not meet the above criteria is expensed as incurred.
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
substantially 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 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. 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.
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 Group.
Revenues from licensing agreements are recognised in line with the performance
obligations being met, as outlined in the terms of the agreement. Grant income
is recognised as earned based on contractual conditions, generally as expenses
are incurred. Such income is recognised as Other Operating Income.
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.
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.
Impairment of assets
At the date of the statement of financial position, the Group reviews the
carrying amounts of its non-current assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less cost to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
New or revised accounting standards
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2023 reporting periods and have not been early
adopted by the Company or the Group. These standards are not expected to have
a material impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
3. EMPLOYEES AND DIRECTORS
2023 2022
£'000 £'000
Directors' remuneration
Directors' emoluments 523 450
Directors' pension contributions to money purchase schemes 29 26
£'000 £'000
Remuneration of the highest paid Director
Directors' emoluments 193 175
Director's pension contributions to money purchase schemes 15 14
There are two (2022: two) Directors who are members of third party held money
purchase retirement benefits schemes.
Average monthly number of persons employed Number Number
Office and management 4 4
Research 1 1
5 5
£'000 £'000
Staff costs during the year
Wages and salaries 520 450
Social security costs 71 48
Pension costs 29 26
620 524
4. NET FINANCE INCOME
2023 2022
£'000 £'000
Deposit account interest 41 1
5. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging: 2023 2022
£'000 £'000
Depreciation - owned assets 1 2
Research and development 2,909 1,780
Other operating leases 21 19
Foreign exchange differences 24 6
Auditor's remuneration 16 13
Auditor's remuneration for non-audit work
- taxation services - 1
- other work - -
6. INCOME TAX
2023 2022
£'000 £'000
Current tax
Adjustment to prior years - (1)
Overseas taxation credit 395 -
UK corporation tax credit on losses for the period 438 408
------------ ------------
833 407
The credit for the year can be reconciled to the accounting loss as follows: 2023 2022
£'000 £'000
Loss before tax (3,192) (2,579)
Notional tax credit at average rate of 20.5% (2022: 19%) 825 490
Effects of:
Capital allowances more than depreciation - 7
Other timing differences (234) (1)
Unutilised tax losses (293) (258)
Losses surrendered for research and development tax credits (298) (239)
Research and development tax credits claimed 833 408
Actual current tax credit in the year 833 407
The tax rate of 20.5% used above is the average corporation tax rate
applicable in the United Kingdom.
A potential deferred tax asset as at 30 June 2023 of £2.8 million (2022:
£2.8 million) calculated using the expected corporation tax rate of 25%
(2022: 25%), has not been recognised, as there remains a significant degree of
uncertainty that the Group will make sufficient profits in the foreseeable
future to justify recognition.
7 EARNINGS PER SHARE
The calculation of loss per share is based on the following data: 2023 2022
Loss on ordinary activities after tax £3,192,000 £2,172,000
Weighted average number of shares in issue 68,069,416 67,679,329
Basic and diluted loss per share (pence) (4.7) (3.2)
As the Group has generated a loss for the period, there is no dilutive effect
in respect of share options.
8. PROPERTY PLANT & EQUIPMENT
Fixtures and computers
£'000
Cost
At 1 July 2022 and 30 June 2023 13
Depreciation
At 1 July 2022 11
Charge for the year 1
At 30 June 2023 12
Carrying amount
At 30 June 2022 1
=======
At 30 June 2023 2
9. INVESTMENTS
Interest in associate
£'000
Cost
At 1 July 2022 1,176
Additions 41
At 30 June 2023 1,217
Provision for impairment
At 1 July 2022 1,153
Impairment for year 18
At 30 June 2023 1,171
Net book value
At 30 June 2022 46
At 30 June 2023 23
The investment in associate represents the investment by the Group in the
partnership with the Cancer Research Technology Pioneer Fund to advance the
SRA737 programme and has been accounted for using the equity method. Sareum's
interest in the associate partnership is 27.5%. As at 30 June 2023 the
partnership had net assets of £19,000 (2022: £83,000) and had incurred
cumulative losses of £0.8 million (2022: £0.7 million).
10. TRADE AND OTHER RECEIVABLES
2023 2022
£'000 £'000
Amounts falling due within one year:
Corporation tax 823 408
Other taxation receivable 75 47
Prepayments and accrued income 81 45
979 500
11. CASH AND CASH EQUIVALENTS
2023 2022
£'000 £'000
Bank deposit accounts 994 4,261
12. TRADE AND OTHER PAYABLES
Group
2023 2022
£'000 £'000
Amounts falling due within one year:
Trade creditors 694 387
Social security and other taxes 22 18
Other creditors 5 5
Accrued expenses 146 45
867 455
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit term agreed with suppliers is
30 days and payment is generally made within the agreed terms.
13. LEASING AGREEMENTS
The lease on the office occupied by the Company is of low value, expiring in
December 2023. The rent payments in the year are also not material to the
financial statements.
14. FINANCIAL INSTRUMENTS
The Group's principal financial instruments are trade and other receivables,
trade and other payables and cash. The main purpose of these financial
instruments is to finance the Group's ongoing operational requirements. The
Group does not trade in derivative financial instruments.
The major financial risks faced by the Group, which remained unchanged
throughout the year, are interest rate risk, foreign exchange risk and
liquidity risk. Policies for the management of these risks are shown below
and have been consistently applied.
MARKET RISKS
Interest rate risk
The Group is exposed to interest rate risk as cash balances in excess of
immediate needs are placed on short term deposit. The Group seeks to optimise
the interest rates received by continuously monitoring those available. The
value of the Group's financial instruments is not considered to be materially
sensitive to these risks and therefore no sensitivity analysis has been
provided.
Foreign exchange risk
The Group's activities expose it to fluctuations in the exchange rate for the
Euro and the US dollar. Funds are maintained in sterling and foreign currency
is acquired on the basis of committed expenditure. The value of the Group's
financial instruments is not considered to be materially sensitive to these
risks and therefore no sensitivity analysis has been provided.
NON-MARKET RISKS
Liquidity risk
The Board has responsibility for reducing exposure to liquidity risk and
ensures that adequate funds are available to meet anticipated requirements
from existing operations by a process of continual monitoring. The value of
the Group's financial instruments is not considered to be materially sensitive
to these risks and therefore no sensitivity analysis has been provided.
15. SHARE CAPITAL
Called up, allotted and fully paid 2023 2022
£ £
68,069,416 (2022: 68,069,416) Ordinary Shares of 1.25p each 850,867 850,867
The Ordinary Shares carry equal rights in respect of voting at a general
meeting of shareholders, payment of dividends and return of assets in the
event of a winding up.
16. RESERVES
Reserve Description and purpose
Share capital Amount of the contributions made by shareholders in return for the issue of
shares.
Share premium Amount subscribed for share capital in excess of nominal value.
Retained earnings Cumulative net gains and losses recognised in the consolidated and the Company
Balance Sheet.
Foreign exchange reserve Arising on consolidation of the overseas subsidiary
Share-based compensation reserve Cumulative fair value of share options granted and recognised as an expense in
the Income Statement.
Details of movements in each reserve are set out in the Consolidated Statement
of Changes in Equity.
17. PENSION COMMITMENTS
The Group makes contributions to its employees' own personal pension
schemes. The contributions for the period of £29,000 (2022: £26,000) were
charged to the profit and loss account. At the balance sheet date
contributions of £5,000 (2022: £4,000) were owed and are included in
creditors.
18. CONTINGENT LIABILITIES
There are no contingent liabilities (2022: £nil).
19. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
Group 2023 2022
£'000 £'000
Operating loss from continuing operations (4,024) (2,580)
Adjustments for:
Depreciation 1 2
Share of loss of associate 18 3
Foreign exchange differences 24 -
Finance income (41) (1)
Operating cash flows before movements in working capital (4,022) (2,576)
Decrease/(increase) in receivables (65) 56
Increase in payables 411 171
Cash used in operations (3,676) (2,349)
======= =======
20. POST BALANCE SHEET EVENTS
In August 2023, after the period end, Sareum agreed terms on an Equity
Prepayment Facility (the "Facility") of up to £5.0 million with RiverFort
Global Opportunities PCC Ltd and received an initial deposit of £2.0 million,
net of associated costs, on 4 August 2023.
The Company intends to use the Facility, if fully drawn, together with the
receipt of anticipated tax incentives to the amount of £1.6 million (of which
£0.4m was received in Australia in September 2023), to complete the Phase
1a/b clinical development of the Group's lead candidate SDC-1801
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