Synairgen : Interim Results

Synairgen plc

('Synairgen' or the 'Company')

Interim results for the six months ended 30 June 2023

Southampton, UK - 21 September 2023: 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 2023.

Highlights (including post period-end)

Operational

• Progressing the Company's patient identification strategy through biomarker and existing clinical data analysis. This will enable the Company to identify patients at higher risk of disease progression, including those with deficient innate immune response and/or high viral load, who might therefore be more likely to respond to SNG001 in future clinical studies.
• Conducting non-interventional preparatory work to expand hospitalised patient populations for potential treatment with SNG001, which are likely to include: ventilated patients with confirmed viral pneumonia; and patients who are unable to clear virus and become persistent viral "shedders", a majority of whom are immunocompromised. Subject to this preparatory work and regulatory approval timelines, trials are anticipated to start in H1 2024.
• Insights from non-interventional studies and the substantial body of evidence gathered to date from previous clinical trials will inform a robust clinical programme for the development of SNG001.

Financial

• Cash and deposit balances of £14.6 million at 30 June 2023 (30 June 2022: £18.0 million; 31 December 2022: £19.7 million). Post period-end receipt of FY 2022 research and development tax credit of £2.4 million.
• Loss before tax for the six months ended 30 June 2023 was £5.2 million (30 June 2022: £14.0 million loss).
  • Research and development expenditure for the six months ended 30 June 2023 was £3.5 million (30 June 2022: £11.1 million) as expenditure on the Phase 3 SPRINTER trial, substantially completed in 2022, decreased and manufacturing activities reduced.
  • Administrative expenses for the six months ended 30 June 2023 were £2.1 million (30 June 2022: £2.9 million), with the reduction being attributable to the pre-commercialisation activities incurred in 2022.

Richard Marsden, CEO of Synairgen, said: "We are focused on progressing our method of identifying those individuals most likely to respond to SNG001 treatment using the large body of data already gathered through previous trials and new non-interventional research, which is currently underway. We hope to maximise the benefits of treatment with SNG001 by targeting patients most likely to respond to treatment by applying both existing and new technologies for patient selection in our next trials of SNG001. This will enable us to focus on the most appropriate patients which will ultimately lead to trials of SNG001 in more targeted, but still large, patient populations at high risk of severe outcomes."

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

[e-mail]

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

Numis Securities Limited (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

[e-mail]

Tel: [phone]

Notes for Editors

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.

OPERATIONAL REVIEW

Synairgen is progressing with vital foundational work in readiness to commence further clinical trials of SNG001 as a broad spectrum antiviral treatment. This work is based on key learnings from the COVID-19 pandemic, which have accelerated the development of new approaches including the broader application of key virus testing in hospitals for symptomatic patients and the advancement of technologies that increase understanding of how respiratory viruses impact the individual, particularly immune system function, using blood and airway fluid samples.

Before commencing further trials of SNG001, and taking into account our helpful learnings from previous studies, Synairgen is developing a patient identification strategy applying existing and new technologies and biomarkers to identify patients whose disease is being actively driven by virus (high virus load) and/or who are struggling to mount an effective antiviral response (deficient innate immune response). The Company believes that these patients are most likely to demonstrate a response to SNG001, with potential benefits in respect of future trial size, duration and costings. By using Synairgen's proposed targeted approach to patient identification the Company is able to better design studies with fewer subjects and thus reduce cost and timings for its drug development.

A study led by the Universities of Southampton and Leicester, involving over 300 adults hospitalised with viral acute respiratory illness, reported that higher viral loads were associated with a prolonged length of stay in the hospital. This suggests that viral load measured at the point of hospital admission could be used in clinical trials, and potentially in clinical practice, to predict those at risk of extended hospitalisation.¹ Building upon this, Synairgen is exploring the relationship between virus load and other risk factors which predict poor outcome in hospitalised patients to inform the development of SNG001 in the hospital setting.

In addition, the Company is expanding the populations of interest to include mechanically ventilated patients in ICU with confirmed viral pneumonia and patients unable to clear virus and become persistent virus shedders, the majority of whom are immunocompromised.

The overall patient identification approach should lead to trials of SNG001 in more targeted, but still large, patient populations at high risk of deterioration/progression to severe outcomes.

In the first half of 2023, Synairgen continued this foundational work to determine the most relevant trials to support its goals. With respiratory viral infections being responsible for upwards of three million hospitalisations in the US each year² the Company remains committed to address this significant unmet need. Despite the great need, there are few therapeutics available to treat the range of viruses that cause these hospitalisations.

Additionally, Synairgen continued to share findings from its trials of SNG001 in COVID-19 patients, including at the American Thoracic Society 2023 conference in May and, post-period end, at the European Respiratory Society 2023 congress in September. These conferences are an extremely valuable way to build the Company's network and showcase the need for a broad-spectrum antiviral.

In summary, Synairgen is continuing to work at pace, partnering with high quality researchers and collaborators, to ensure it has the right trial designs, equipped with the right diagnostic tools, to be able to identify trial participants potentially most likely to benefit from a broad-spectrum antiviral and SNG001. This work (including biomarker assessments), together with the substantial body of evidence gathered from clinical trials with SNG001 to date, will inform a robust clinical development programme for SNG001. It is the Company's goal to commence trials as soon as possible, subject to approval timelines, and within H1 2024.

FINANCIAL REVIEW

Statement of Comprehensive Income

The loss from operations for the six months ended 30 June 2023 (H1 2023) was £5.5 million (six months ended 30 June 2022 (H1 2022): £14.0 million loss; year ended 31 December 2022 (FY 2022): £20.3 million loss) with research and development expenditure amounting to £3.5 million (H1 2022: £11.1 million; FY 2022: £14.9 million) and other administrative expenses £2.1 million (H1 2022: £2.9 million; FY 2022: £5.4 million).

The reduction in research and development expenditure from £11.1 million to £3.5 million is attributable to the lower expenditure on the Phase 3 SPRINTER trial, which was substantially completed in 2022, and reduced manufacturing activities.

Other administrative expenditure decreased from £2.9 million in H1 2022 to £2.1 million in H1 2023 on account of pre-commercialisation activities incurred in 2022.

The research and development tax credit decreased from £1.6 million in H1 2022 to £0.5 million in H1 2023 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 2023.

The loss after tax for H1 2023 was £4.7 million (H1 2022: £12.4 million; FY 2022: £17.6 million) and the basic loss per share was 2.36p (H1 2022: 6.16p loss; FY 2022: 8.76p loss).

Statement of Financial Position and Cash Flows

At 30 June 2023, net assets amounted to £16.0 million (30 June 2022: £24.9 million; 31 December 2022: £20.3 million), including cash and deposit balances of £14.6 million (30 June 2022: £18.0 million; 31 December 2022: £19.7 million). Post period-end, in August 2023, the tax credit of £2.4 million in respect of FY 2022 was received.

The principal elements of the £5.1 million reduction in cash and deposit balances during H1 2023 (H1 2022: £15.8 million reduction; FY 2022: £14.2 million reduction) were:

• Cash used in operations £5.3 million (H1 2022: £15.8 million outflow; FY 2022: £23.4 million outflow);
• Research and development tax credits received of £nil (H1 2022: £nil; FY 2022: £9.1 million); and

• Interest received £0.3 million (H1 2022: £nil; FY 2022: £0.1 million).

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

• Current tax receivable: 30 June 2023: £2.9 million; 30 June 2022: £10.6 million; 31 December 2022: £2.4 million on account of the lower research and development tax credit receivable. As noted above, the 2022 tax credit of £2.4 million was received in August 2023.
• Trade and other payables: 30 June 2023: £2.7 million; 30 June 2022: £4.6 million; 31 December 2022: £3.3 million, in line with the reduction in the level of operating expenditure.

The Company's cash resources are sufficient to cover its plans to design and establish data from an observational study and two investigator-led/Synairgen-sponsored Phase 2 clinical trials, including manufacture of active and placebo for use in these trials. Regardless of the outcome of these activities, which are uncertain, the Company's available resources are sufficient to cover existing committed costs and the estimated costs of these activities until at least 30 September 2024, 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.

Change of Name of Nominated Adviser and Joint Broker

The Company also announces that its Nominated Adviser and Joint Broker has changed its name to Cavendish Capital Markets Limited following completion of its own corporate merger.

References

1 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7112535/

2 IQVIA market research Q4 2022; Sources. US CDC, HCUP, IQVIA Claims Data, PubMed; data on file

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