Sareum Holdings plc

("Sareum" or "the Company")

Final Results

Sareum Holdings plc (AIM: SAR), the specialist cancer drug discovery and development business, is pleased to announce its final results for the year ended 30 June 2016.

Financial highlights

·     Net assets at year-end were £1.86 million (2015: £1.86 million), of which £1.25 million comprised cash at bank (2015: £1.48 million), plus £0.48 million unspent investment in the Chk1 project (2015: £0.21 million).

·     Loss on ordinary activities (after tax credit) of £1.05 million (2015: loss of £1.26 million).

·     Successful placing in March 2016 to raise £1.1 million before expenses.

·     Received £111k of the £140k funding award for TYK2 cancer studies from Innovate UK Biomedical Catalyst; the remainder received post year-end.

Operational highlights

·    Chk1 clinical trials applications for two clinical trials, one as a single agent and the other in combination with standard of care chemotherapies, submitted, approved and opened at The Royal Marsden Hospital.

·    TYK2 lead inhibitors show good activity in disease models of rheumatoid arthritis and colitis, and compare favourably with a marketed JAK-family kinase inhibitor.

·    Appointment of Dr Stephen Parker as Non-executive Chairman

Post year end highlights

·    Chk1 inhibitor cancer drug candidate CCT245737 (renamed PNT737) licensed to ProNAi Therapeutics, Inc. (NASDAQ: DNAI) by co-investment partner, the CRT Pioneer Fund. Sareum will receive an upfront payment of US$1.9 million, potential future milestone payments of up to US$88.4 million, plus a share of any sales royalties, and repayment of approximately £300k in unspent funds previously invested in the collaboration.

·    Successful outcome from TYK2 cancer feasibility study, part-funded by £140k award from Innovate UK Biomedical Catalyst; results support case to advance programme further.

Dr Tim Mitchell, Chief Executive Officer of the Company, said:

"I am delighted with the progress we have made in the last year and in particular our work that has culminated in a licence agreement for the Chk1 programme. We are now in a good position, both financially and with the knowledge that we have a proven strategy, to pursue our other drug candidates and expand our asset portfolio."

Enquiries:

Chairman's Statement

In my first statement as Non-executive Chairman of Sareum, I am very pleased to report on a year of considerable progress, which has culminated in the licensing of Chk1 by our co-investment partners to ProNAi Therapeutics, Inc., a well funded US clinical stage drug development company. The progress made validates the business model to pursue multiple drug development programmes and affirms the team's ability to grow the value of these assets in order to make them attractive to potential licensees and commercial partners.

The most advanced programme, Chk1, achieved a series of significant milestones, which led to the approval of two clinical trials to commence towards the end of the period. These were officially opened at The Royal Marsden Hospital in May 2016. Discussions with potential licensees continued throughout the year with the Company's first licensing deal signed by our co-development partner, the CRT Pioneer Fund, at the end of September.

Preclinical development of the Aurora+FLT3 candidate, with Chinese partner Hebei Medical University Biomedical Engineering Center, has had to overcome a number of challenges which have resulted in delays to the project. With these believed to have been largely resolved, preclinical studies are now expected to complete in the latter part of 2017.

The two TYK2 programmes targeting autoimmune diseases and the blood cancer T-ALL continue their progression through preclinical studies. A feasibility study, supported with a £140k grant from the Innovate UK BioMedical Catalyst, was concluded successfully having shown tumour regression in a disease model of T-ALL, opening the programme for further investigation. Given the wide potential for our TYK2 programmes, we continue to seek a commercial partner to share the ongoing research costs with a view to licensing the programme at a later stage of development.

Board changes

I succeeded Dr Paul Harper as Chairman of the Company on 17 May 2016. I would like to thank Dr Harper for his invaluable contribution to the Company during his twelve year tenure as Non-executive Chairman. During his time with Sareum, Dr Harper helped to define the direction and strategy of the Company which allowed considerable value to be built into our multiple programmes through their progression towards, and into, early clinical development.

Financial review

The Company ended the year with net assets of £1.86 million (2015: £1.86 million) of which £1.25 million comprised cash at bank, and £0.48 million unspent in the Chk1 project account (2015: £0.21 million).

The loss on ordinary activities after taxation for the year was £1.05 million (2015: loss of £1.26 million) including £332k as our share of the expenditure on the Chk1 programme during the course of the year. In March 2016, the Company raised £1.10 million, before expenses, through a share placing to progress our drug development programmes as well as to provide working capital. In addition to this, £111k of a £140k funding award was received for TYK2 cancer studies from Innovate UK Biomedical Catalyst, with the remainder received post year-end.

Following the licensing of Chk1 to ProNAi Therapeutics, we have received £900k of the £1.50 million upfront payment. The remaining £600k plus the unspent co-investment funds, estimated at approximately £300k, are expected to be received in the near future. 

Outlook

The ongoing development of our most advanced asset, Chk1, is now being conducted by ProNAi. In addition to the upfront payments noted above, Sareum is entitled to receive further milestone payments of up to US$88.4 million over the course of the drug candidate's development, registration and commercialisation, plus a 27.5% share of high single to low double-digit royalties on future sales. We are also encouraged by ProNAi's stated intention to expand the development of the programme into the United States, with broader clinical studies.

Sareum is now in a strong position to continue to pursue the three assets that remain under its control and explore new potential autoimmune and anti-cancer drug candidates, either from its own kinase library or by in-licensing early stage discoveries from external sources.

We look forward to reporting on our progress over the coming year.

Dr Stephen Parker
 Chairman

1^st November 2016

Research update

Checkpoint kinase 1 (Chk1)

Working with our co-investment partner, the CRT Pioneer Fund, clinical trial applications were prepared in the first half of the financial year for two clinical trials in cancer patients, one with CCT245737 as a single anti-cancer agent targeting a variety of cancers, and the other in combination with standard-of-care chemotherapies, ultimately targeting lung and pancreatic cancers.

Clinical trial applications were submitted at the beginning of February 2016 triggering a £200k success milestone payment from Cancer Research Technology Ltd to Sareum. With permission granted in April by The MHRA to conduct trials, these were opened at The Royal Marsden Hospital in May 2016.

Meanwhile, data on the candidate were published and described in the leading scientific journals Oncotarget (July 2015) and the Journal of Medicinal Chemistry (May 2016). Data on an earlier lead compound, showing encouraging results against certain aggressive breast cancer cell types and improving the efficacy of chemoradiotherapy in a head and neck cancer disease model were also published during the period.

It was this progress that enabled our collaboration partner to secure a licence agreement for the Chk1 programme, including drug candidate CCT245737 (now renamed PNT737), with ProNAi Therapeutics, Inc. post year end. ProNAi benefits from a world-class oncology development team and is well capitalised, and we believe these studies and the ongoing development strategy for this drug are in excellent hands. With plans to expand the programme into the US, we will continue to monitor and report on progress.

Aurora+FLT3 kinases

Our Aurora+FLT3 candidate molecule, targeting acute myeloid leukaemia, is being developed in collaboration with our Chinese partner, Hebei Medical University Biomedical Engineering Center (HMUBEC).

Having overcome difficulties in synthesising sufficient compound material for toxicology studies, the programme has faced further significant challenges in the formulation and administration of the compound. We believe these have been largely overcome, but this has resulted in further delays to the project. As a result we now expect to complete the toxicology and safety pharmacology studies by H2 2017.

During the period and post period-end, our intellectual property was strengthened by notifications of patents granted in Europe, the US, China, Hong Kong, Singapore and Japan. As a result, Sareum now has approved patent protection in all the major territories for this programme.

TYK2 kinase - autoimmune and inflammatory disorders

Our autoimmune and inflammatory disorders programme, with co-development partner SRI International, is developing a series of orally bioavailable inhibitors of TYK2, a member of the Janus kinase (JAK) family of kinases. JAK family kinases are the targets of several marketed and clinical stage drugs for cancer and autoimmune diseases, although none of these specifically target TYK2, giving us a potentially unique position in this area. 

We have previously reported the discovery of our initial lead candidate SAR-20347, which has shown that, when dosed orally, it can significantly decrease psoriasis pathology in a disease model as well as demonstrating strong efficacy in a standard model of rheumatoid arthritis.

Building on the rheumatoid arthritis data package, we have synthesised further analogues of SAR-20347 and carried out studies on disease models of ulcerative colitis. These compounds show good activity in standard models of both diseases and compare favourably with a marketed JAK family kinase inhibitor.

The next steps are to complete the optimisation of the molecule and to validate our candidate in other models of autoimmune diseases including inflammatory bowel disease and multiple sclerosis. In addition, Sareum's co-development partner has secured a US government grant award of approximately US$360k to carry out research to evaluate our TYK2 inhibitors as a possible strategy for treating lupus. Lupus is a complex and poorly understood autoimmune disease mainly suffered by women and it affects many parts of the body; its symptoms can range from mild to debilitating and even life threatening.  

TYK2 kinase - cancer

On 17 June 2015, Sareum announced that it had received notification from Innovate UK for a BioMedical Catalyst funding award of £140k to explore TYK2 inhibition as a potential strategy to prevent the spread of and/or to combat resistance to treatment for T-ALL, a type of leukaemia that predominantly affects children and adolescents.

The project was concluded successfully in August 2016, with lead compounds showing significant tumour regressions of up to 80%. Additionally, the compounds, dosed orally, were found to be well tolerated, presented good exposure to plasma and tumour tissue, and showed a dose-dependent effect on a biomarker of TYK2 inhibition.

Following on from these positive results, we will now be working toward completing the optimisation of the molecule and looking to demonstrate its efficacy in further cancer models. In order to support these investigations, we will be submitting new grant funding applications.

Dr Tim Mitchell
Chief Executive Officer

1^st November 2016