Synairgen plc

('Synairgen' or the 'Company')

Results for the year ended 31 December 2023

Southampton, UK - 27 June 2024: Synairgen plc (LSE: SNG), the respiratory company developing SNG001, an investigational formulation for inhalation containing the broad-spectrum antiviral protein interferon beta, today announces its preliminary statement of audited results for the year ended 31 December 2023.

Highlights (including post period-end)

Operational  

·    Completed a full assessment of the underpinning science, clinical trial data, clinical need and commercial opportunity to determine next steps for SNG001 

·    Commenced preparatory work in 2023 to deliver a trial focusing on mechanically ventilated patients who we believe are the most attractive near-term patient group with respect to the extent of the unmet need, the commercial potential in a clearly identifiable population and the clinical development route for SNG001

·    Recognised that opportunities for potential future assessment of SNG001 in platform trials and/or academic trials may materialise in the event of an emerging virus threat 

·    Continued collaboration with the University of Southampton's UNIVERSAL trial aimed at better characterising patients hospitalised with respiratory viral infections with over 500 patients recruited to date 

Financial 

1.   Prudent cost control applied across all operations 

2.   Loss from operations for the year ended 31 December 2023 was £10.3 million (2022: £20.3 million loss) 

3.   Cash and cash equivalents, and bank deposits of £12.0 million at 31 December 2023 (31 December 2022: £19.7 million) 

Richard Marsden, CEO of Synairgen, said: "We are pleased to have selected an exciting path forward for SNG001, which is to conduct a Phase 2 trial in mechanically ventilated patients where there is a substantial unmet medical need with 25% to 45% mortality and few antiviral therapeutic options. Alongside this, we have continued our work as part of the UK-wide UNIVERSAL trial and remain open to other collaborations and platform trials in the future. We will keep all stakeholders up to date on developments, including financing, as we prepare to start the trial this winter."

Annual Report and AGM update

Synairgen has published its Annual Report and Accounts for the year ended 31 December 2023 on its website, www.synairgen.com. The date of the upcoming AGM will be published in due course, with the Annual Report and Accounts and AGM notice posted to shareholders ahead of this.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further enquiries, please contact: 

Synairgen plc 

Media@synairgen.com 

Tel: + 44 (0) 23 8051 2800 

Cavendish Capital Markets Limited (NOMAD and Joint Broker) 

Geoff Nash, Charlie Beeson (Corporate Finance) 

Sunila de Silva (ECM) 

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

Synairgen@consilium-comms.com

Tel: +44 (0) 20 3709 5700 

Notes for Editors 

About Synairgen

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

Millions of people globally are hospitalised every year due to viral lung infections and there are currently no approved antiviral therapies for the majority of these patients. Synairgen is developing SNG001 to address this need.

Synairgen is quoted on AIM (LSE: SNG). For more information about Synairgen, please see www.synairgen.com

CHAIRMAN'S STATEMENT

There remains a significant unmet medical need for new treatments for respiratory viral infections which are caused by a wide range of viruses (influenza, RSV, SARS-CoV-2, rhinovirus, metapneumovirus and others). Antiviral therapeutic options are limited for the majority of hospitalised adult patients with severe viral lung infections, which remain a leading cause of death globally. Approximately 2.5 million people in the US are hospitalised each year due these respiratory viruses. 

Synairgen's relentless focus in the year has been on applying the insights gained from 2020/21 to determine the best path forward for clinical development of its investigational drug, SNG001, for severe viral lung infections. This was conducted amidst the backdrop of a challenging year for the biotech sector; we have regained momentum and stand on the verge of embarking on a Phase 2 trial in patients who are mechanically ventilated as a result of a respiratory viral infection, subject to finalising the trial financing plan. We have selected this population because it has a high unmet need, represents a significant commercial opportunity, patients are readily identifiable, and the clinical path is clear. We look forward to communicating the trial design and associated financing plan.   

Since the results of SPRINTER and ACTIV-2 trials were announced, our team has focussed on using the findings from these studies, the literature and clinical experts to determine which patients stand to potentially benefit most from SNG001 and developing the clinical network and trial protocol which carries an appropriate level of risk and reward for Synairgen shareholders. The considerable research work that was required to critically evaluate all potential options has ultimately led us to eliminate a number of potentially promising avenues for further clinical development.  We have made a strategic decision to focus on mechanically ventilated patients in the hospital setting enabling clinical development with smaller, easier to deliver clinical trials in an area of high unmet medical and pharmacoeconomic need. We have determined that it is inappropriate at this stage for the Company to conduct clinical trials in the non-hospitalised setting, although we believe that SNG001 continues to be an attractive asset in this setting, and we are open for inclusion of SNG001 in platform trials and/or collaborations as and when viral threats emerge.

I would like to take this opportunity to thank the entire team for their unwavering commitment to finding a path forward for SNG001 and express my appreciation to our shareholders for their continued support. I look forward to updating the market with greater detail on our development plans.

Simon Shaw

Chairman

OPERATIONAL REVIEW

Overview 

During the past year the Group thoroughly assessed a wide range of options to identify the best route forward for its broad-spectrum host-directed antiviral drug, SNG001 (inhaled interferon beta), for the treatment of severe viral lung infections. Respiratory viral infections are the most common cause of infectious disease and when they affect the lungs, they can cause significant morbidity and mortality. Interferon beta is a naturally occurring protein, produced in response to viral infections, that drives the body's antiviral responses. People who make less interferon beta, for example due to their genetic profile, age or disease, are at greater risk of developing severe viral lung infections. Respiratory viruses themselves also supress interferon beta production to evade host antiviral responses. Together these factors provide the rationale to deliver SNG001 directly into the lungs as an aerosol to boost/restore the lungs' antiviral responses to clear the virus. During the year, Synairgen completed a review of potential development opportunities for SNG001 through careful assessment of the underpinning science, strength of clinical data, trial feasibility, clinical need and commercial opportunity. This included options in both hospitalised and non-hospitalised patients, and those with critical illness due to any respiratory virus.  

As a result of this analysis, it has become clear that the hospitalised patient setting provides the greatest opportunity for SNG001 to provide assessable benefit in a group of patients in whom there is considerable unmet clinical need. Synairgen has focused its efforts on projects designed to enable identification of hospitalised patients at the highest risk of poor outcomes, which would make clinical trials more targeted whilst maximising the chance of success clinically and commercially.  

The Company has developed a new trial plan focussed on mechanically ventilated patients that takes into account a range of important factors including learnings from trials of SNG001 in hospitalised patients, the high unmet need, and the clear commercial strategy for this group of very expensive to treat patients. It is intended to commence the trial this winter and will be supported by data from various projects, including the UNIVERSAL trial, a UK-wide observational trial in patients hospitalised with respiratory viral infections, led by Prof. Tom Wilkinson and colleagues from the University of Southampton, in conjunction with pharmaceutical industry partners. Recruitment has continued at pace into UNIVERSAL and the important insights will help the Company develop criteria to select populations most likely to respond to SNG001 for inclusion in future clinical trials. 

Our strategy and plans 

Mechanically ventilated patients 

Respiratory viral infections are a significant burden on the global healthcare system, and are associated with high morbidity and mortality. Approximately 2.5 million¹² people in the US continue to be hospitalised each year due to respiratory symptoms associated with a respiratory virus. Prior to the pandemic, influenza was often singled out as the main driver of the winter virus season accounting for ~0.5m¹ hospitalisations each year, however it is estimated that the so called 'common cold viruses' such as rhinovirus, coronavirus, RSV, parainfluenza, HMPV and adenovirus collectively account for an additional 2 million hospitalisations², and SARS-CoV-2 persists as a problematic pathogen.  

Patients on ventilators with viral pneumonia have a 25-45%³⁴ chance of dying. There are few approved antiviral options for these patients and, for most respiratory viruses, no specific antiviral treatments. The literature also indicates that patients who develop severe viral lung disease have higher viral loads and shed virus for longer pointing to a compromised immune/antiviral response.  

Analyses of several trials conducted by Synairgen to date reveal that, across different patient populations and care settings, those with more severe disease at the start of treatment responded best to treatment with SNG001. This includes prevention of hospitalisation in patients treated in the community as well as progression to severe disease or death in patients hospitalised due to their viral infection. These observations underpin our strategy of targeting patients at the highest risk of poor outcomes. 

As a broad-spectrum antiviral drug, SNG001 has shown in vitro effects against multiple respiratory viruses and in vivo has uncovered its potential to treat and/or prevent severe viral lung infection. Preparatory work for a trial commenced in 2023 and has continued into 2024. The company is currently finalising potential trial structures and a potential financing plan to enable it to pursue an enhanced trial structure. If this comes about, details will be communicated in due course.   

UNIVERSAL trial 

During the year the Group has continued its work with Prof. Tom Wilkinson from the University of Southampton to progress UNIVERSAL, a multi-centre observational study in patients recently hospitalised due to respiratory viruses. UNIVERSAL is supported by Synairgen, AstraZeneca, and Janssen. A key objective is to develop methods to identify patients at higher risk of poor outcomes due to respiratory viruses.  

UNIVERSAL is progressing well with more than 500 patients recruited to date. Data and samples are being analysed as they are collected, and will continue through 2024. Results from UNIVERSAL will provide more insight for the Company to help inform the design of future trials with SNG001, allowing Synairgen to identify patients at the highest risk of disease progression whilst avoiding patients who are more likely to recover rapidly without the need for an antiviral intervention. 

Key learnings from other patient populations 

Non-hospitalised: During the pandemic the Company generated encouraging data in non-hospitalised patients from both its own 'SG016 home trial' and through collaboration with the US Government's ACTIV-2 trial team, which was ultimately halted due to declining rates of infection.  This COVID-19 data sits well alongside earlier data from trials in asthma and COPD. 

Neither the SG016 home nor ACTIV-2 studies were powered to demonstrate statistical significance on hospital admission as an endpoint, however pooling the data from all 330 COVID-19 patients from the two studies showed that 1 out of 165 patients on SNG001 (<1%) were hospitalised compared to 10 out of 165 (6%) placebo patients⁵⁶. This represents a ~90% relative risk reduction, a comparable reduction to that seen with Paxlovid in Phase 3 trials. The encouraging signals coincided with the less pathogenic Omicron becoming the dominant circulating variant. As a result, hospitalisation rates with COVID-19 significantly dropped, meaning that clinical trial sizes needed to confirm the efficacy of SNG001 in the outpatient setting would exceed thousands of patients and therefore became commercially unfeasible for a Company of Synairgen's size.   

Despite this, Synairgen believes that SNG001 continues to be an attractive asset for inclusion in platform trials, a position the Company was not in prior to the pandemic. 

Long term viral shedders: Beyond pandemic preparedness, Synairgen has explored various non-hospitalised patient groups who are particularly vulnerable to viral lung infections, with a particular focus on patients who struggle to clear the virus and become long term shedders of virus, many of whom are immunocompromised patients (e.g. through undertaking cancer treatments). After careful consideration, the Company elected not to fund its own trials in these very high-risk patients at this point in time. This decision was primarily based on the large size of trial required to demonstrate a reduction in the rate that patients are hospitalised, and the logistical complexity of patient identification. The Company will, however, continue to be open to trial collaborations in this area.  

Summary 

After conducting a rigorous evaluation of the clinical need, supporting scientific literature, trial feasibility, and commercial viability, Synairgen's strategic decision is to determine an appropriately sized trial in mechanically ventilated patients who it believes are most likely to benefit from SNG001 as a result of infection from a wide range of respiratory viruses causing appreciable morbidity, mortality and a strain on health care infrastructure.

The Company continues to be extremely excited by the potential for SNG001 to be the first inhaled broad-spectrum antiviral targeting the lungs. The Synairgen team is ever grateful for the support of its loyal investors, partners and staff in a crucial year where it has researched the rationale for, and is gearing up to execute on, the most appropriate strategy for the development of SNG001. The Company is currently finalising its assessment of the best combination of trial structure/locations and associated financing requirement and aim to communicate the outcome of this soon with a view to commencing the next Phase II trial this winter. 

FINANCIAL REVIEW

Consolidated Statement of Comprehensive Income  

The loss from operations for the year ended 31 December 2023 was £10.3 million (2022: £20.3 million loss) with research and development expenditure amounting to £6.5 million (2022: £14.9 million) and other administrative expenses of £3.8 million (2022: £5.4 million).  

Expenditure on research and development activity decreased in 2023, continuing the trend from the prior year, as the Group focussed on refining plans for future clinical trials.  

Clinical trial expenditure was limited to the cost of closing out the SPRINTER, SG015 and SG016 trials, in conjunction with preparatory work to design future clinical trial activity, such as participation in the UNIVERSAL trial.    

Manufacturing activities also reduced significantly in the year, with spend focussed on the manufacture of a new batch of drug product and placebo (pre-filled syringes), and third-party laboratory testing (incorporating stability, comparison and release testing of drug product, qualification of new reference standards).  All manufacturing costs were expensed to the income statement.  

Expenditure on science (R&D) and quality departments remain flat on the prior year, with regulatory costs reducing in-line with diminished trial activity.  

Other administrative expenses totalled £3.8 million in 2023, which comprise all expenses which are not research and development expenditure, and predominantly reflect staff costs and professional fees. This represents a decrease of £1.6 million on the prior year (2022: £5.4 million), due to cost saving initiatives implemented within commercial, medical affairs, business development, and corporate communications.  

Interest receivable increased from £0.2 million to £0.6 million, as deposit interest rates increased during 2023.  

The research and development tax credit (including R&D expenditure credit - "RDEC") decreased from £2.4 million to £1.3 million in line with reduced qualifying research and development expenditure. The credit equates to 20% of our 2023 research and development expenditure (2022: 16%).  

The loss after tax for 2023 was £8.4 million (2022: £17.6 million) and the basic loss per share was 4.18p (2022: basic loss per share of 8.76p).  

Consolidated Statement of Financial Position and Cash Flows  

At 31 December 2023, net assets amounted to £12.7 million (2022: £20.3 million), including cash and deposit balances of £12.0 million, comprising cash and cash equivalents of £10.5 million and other financial assets - bank deposits of £1.5 million (2022: £19.7 million cash and bank deposit balances).  

The principal elements of the £7.7 million decrease during the year ended 31 December 2023 (2022: £14.1 million decrease) in cash and bank deposit balances were:  

·      Cash outflows from operations before changes in working capital: £9.4 million (2022: £19.3 million), with the reduction being attributable to the lower research and development administrative expenditure and as explained above;  

·      Changes in working capital: £1.2 million outflow (2022: £4.1 million outflow), due to a reduction in trade and other payables of £1.7 million, and a £0.5 million decrease in trade and other receivables;  

·      Interest received £0.6 million (2022: £0.2 million); and  

·      Research and development tax credits received: £2.4 million (2022: £9.1 million) on account of receipt of the 2022 tax credit.  

The other significant changes in the Statement of Financial Position were:  

·      Current tax receivable decreased from £2.4 million to £1.3 million on account of the lower research and development tax credit (including RDEC) receivable;  

·      Trade and other receivables decreased by £0.5 million to £0.8 million (2022: £1.3 million), due predominantly to a reduction in prepayments due to the reduction in the level of operating expenditure; and 

·      Trade and other payables decreased by £1.7 million to £1.6 million (2022: £3.3 million), in line with the reduction in the level of operating expenditure. 

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2023

Consolidated Statement of Changes in Equity

for the year ended 31 December 2023

Consolidated Statement of Financial Position

as at 31 December 2023

Consolidated Statement of Cash Flows

for the year ended 31 December 2023

Notes

1.       Basis of preparation 

The financial information of the Group set out above does not constitute "statutory accounts" for the purposes of Section 435 of the Companies Act 2006. The financial information for the year ended 31 December 2023 has been extracted from the Group's audited financial statements which were approved by the Board of directors on 26 June 2024 and will be delivered to the Registrar of Companies for England and Wales in due course. The financial information for the year ended 31 December 2022 has been extracted from the Group's audited financial statements for that period which have been delivered to the Registrar of Companies for England and Wales. The reports of the auditors on both these financial statements were unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of UK adopted International Financial Reporting Standards ('IFRSs'), this announcement does not itself contain sufficient information to comply with those IFRSs. This financial information has been prepared in accordance with the accounting policies set out in the December 2023 report and financial statements.

2.       New standards, interpretations and amendments adopted from 1 January 2023  

With effect from 1 January 2023, the Group adopted the amendments to existing standards set out below that are effective for an annual period that begins on or after 1 January 2023: 

·    Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies  

·    Amendments to IAS 8 - Definition of Accounting Estimates 

The adoption of these amendments has not had a material impact on the disclosures or on the amounts reported in the Group's financial statements. 

3.       New standards, interpretations and amendments not yet effective 

At the date of approval of these Group financial statements, the Group had not yet applied the following new and revised accounting standards, amendments and interpretations that have been issued by the IASB and have been adopted by the UK Endorsement Board (UKEB): 

Effective 1 January 2024: 

·    Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback 

·    Amendments to IAS 1 - Classification of Liabilities as Current or Non-current  

The Group does not expect the adoption of these IFRS amendments will have a material impact on the Group in the current period or will have material impact on future reporting periods and on foreseeable future transactions. 

The Group financial statements are presented in Sterling. 

4.       Going concern 

The directors have prepared financial forecasts to estimate the likely cash requirements of the Group 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 consider that they have taken a prudent view in preparing these forecasts. 

The directors have identified that the Group 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 Group 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 undertake a fund raise in 2025, 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 Group having sufficient resources until Q1 2026 without the need for a further fund raise, whilst maintaining the principal activity of the Group. 

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, including the sensitivity of key inputs, the directors consider that the Group has adequate financial resources to continue in operational existence for the foreseeable future (being a period of at least 12 months from the date of this report) and, for this reason, the financial statements have been prepared on a going concern basis. 

5.       Tax

The tax credit of £1.3 million (2022: £2.4 million) relates to research and development tax credits (including R&D expenditure credit - "RDEC") in respect of the year ended 31 December 2023.

6.       Loss per ordinary share

Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the parent company by the weighted average number of ordinary shares in issue during the year.

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings 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 under the terms of IAS 33.

References

^[1] https://www.cdc.gov/flu/about/burden/past-seasons.html

² Sieling WD, Goldman CR, Oberhardt M, Phillips M, Finelli L, Saiman L. Comparative incidence and burden of respiratory viruses associated with hospitalization in adults in New York City. Influenza Other Respir Viruses. 2021 Sep;15(5):670-677.

³ Piroth L, Cottenet J, Mariet AS, Bonniaud P, Blot M, Tubert-Bitter P, Quantin C. Comparison of the characteristics, morbidity, and mortality of COVID-19 and seasonal influenza: a nationwide, population-based retrospective cohort study. Lancet Respir Med. 2021 Mar;9(3):251-259.

⁴ Louie JK, Acosta M, Winter K, Jean C, Gavali S, Schechter R, Vugia D, Harriman K, Matyas B, Glaser CA, Samuel MC, Rosenberg J, Talarico J, Hatch D; California Pandemic (H1N1) Working Group. Factors associated with death or hospitalization due to pandemic 2009 influenza A(H1N1) infection in California. JAMA. 2009 Nov 4;302(17):1896-902.

⁵ Jagannathan P, Chew KW, Giganti MJ, Hughes MD, Moser C, Main MJ, Monk PD, Javan AC, Li JZ, Fletcher CV, McCarthy C, Wohl DA, Daar ES, Eron JJ, Currier JS, Singh U, Smith DM, Fischer W; ACTIV-2/A5401 Study Team. Safety and efficacy of inhaled interferon-β1a (SNG001) in adults with mild-to-moderate COVID-19: a randomized, controlled, phase II trial. EClinicalMedicine. 2023 Oct 6;65:102250. doi: 10.1016/j.eclinm.2023.102250. PMID: 37855026; PMCID: PMC10579289.

⁶ Francis NA, Monk PD, Nuttall J, Oliver T, Simpson C, Brookes JL, Tear VJ, Thompson AG, Batten TN, Mankowski M, Wilkinson TM. Feasibility of home administration of nebulised interferon ß-1a (SNG001) for COVID-19: a remote study. BJGP Open. 2023 Dec 19;7(4):BJGPO.2023.0089. doi: 10.3399/BJGPO.2023.0089. PMID: 37669805; PMCID: PMC11176681.