Annual Report
and Accounts 2013
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LABORATORY
RESEARCH
CLINICAL RES EA RC H
DRUG
THERAPY
Synairgen plc, Mailpoint 810, Level F, South Block, Southampton General Hospital, Tremona Road, Southampton, SO16 6YD United Kingdom
© Synairgen plc
Stock symbol: LSE:SNG
www.synairgen.com
Contents
Introduction
Overview of Synairgen
Highlights
Business Review
Strategic Report
Scientific Review
Governance
Directors
Synairgen’s Founders and
Scientific Advisors
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Financials
Statement of Directors’
Responsibilities
Independent Auditor’s Report
to the members of Synairgen plc
Consolidated Statement
of Comprehensive Income
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Parent Company Balance Sheet
Notes to the Parent Company
Financial Statements
Other
Corporate Directory
Glossary
1
2
3
7
11
13
14
15
17
21
22
23
23
24
25
26
37
38
41
41
Respiratory disease
is an area of significant
unmet clinical need:
1.1
million children
under 5 years
old are killed by
pneumonia every
year (18% of all
deaths of children
under 5)
*
Pneumonia is usually
caused by viral and/or
bacterial infections.
64
million people have
Chronic Obstructive
Pulmonary
Disease (COPD)
COPD is a collective term
for chronic bronchitis and
emphysema and more than
3 million people died of
COPD in 2005 (representing
5% of all deaths in that year)
*
235
million people
currently suffer
from asthma
globally
*
* Source: World Health Organisation
1 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Synairgen’s advanced cell models:
a translational research platform
Respiratory research has been hampered by the inability
of animal models to truly replicate disease pathology and
chronicity as well as the impact of environmental factors such
as viruses, cigarette smoke and other inflammatory agents.
To overcome such issues, Synairgen, in collaboration with
the University of Southampton, has developed a number of
advanced cell models using tissue and cells from human
volunteers. Synairgen has accumulated a Biobank of clinical
samples of blood, sputum, biopsies and bronchial epithelial
cells obtained from a mix of well-characterised asthma or
COPD volunteers and healthy control subjects. Using the
cell-based models, Synairgen can analyse the complex
interactions between disease and triggers of disease within
lung tissue and use this knowledge to discover, develop and
validate novel drug targets. Once targets have been validated
in the laboratory, Synairgen’s clinical team has the proven
experience and capability to design and run appropriate
Phase I and II proof of concept clinical trials.
Synairgen’s interferon beta programme (SNG001)
Observations made in the cell-based models revealed
that cells lining the airways of asthmatics were particularly
susceptible to the common cold on account of a poor
immune response mediated by a deficiency in interferon
beta (‘IFN-β’). The fact that this deficiency could be
remedied by the addition of IFN-β in the asthma and COPD
models provided the basis for the clinical development
programme which followed. This culminated in a Phase
II proof of concept trial in asthma which read out during
2012. Exacerbations (acute deterioration of symptoms)
represent the greatest unmet clinical need in asthma and
COPD, and the common cold causes up to 80% of asthma
exacerbations. Discussions are ongoing for the outlicensing
of the programme.
Future opportunities
During the last few years, Synairgen has focused on its
translational research platform to develop SNG001. This
technology and Synairgen’s unique experience can add
value to other respiratory development opportunities and
a number of external opportunities have been identified for
review and potential in-licensing.
Synairgen is a respiratory
drug discovery and
development company
Strategy
Using its research platform (human tissue
models of respiratory disease, employing
Synairgen’s Biobank) and its clinical trial
capabilities, Synairgen’s strategy is to
identify novel drug targets, progress them
through early stage clinical trials and out-
license them to partners for progression
to market.
Highlights for the year
ended 31 December 2013
l Ongoing licensing discussions
for SNG001
l Further developments being
identified for Synairgen’s
advanced technology platform
l Research and development
expenditure for the year:
£1.3 million (2012: £1.5 million)
l Post-tax loss for the year:
£2.0 million (2012: £2.3 million)
l Cash, cash equivalents and bank
deposits at 31 December 2013:
£1.3 million (2012: £3.1 million)
l Balance sheet strengthened post
year-end with fundraising of
£1.5 million (gross) completed
in March 2014
www.synairgen.com
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 2
Strategic Report
The directors present their Strategic Report for the year ended 31 December 2013.
Principal activities
Synairgen plc is the holding company for Synairgen Research
Limited, a respiratory drug discovery and development company.
Operating Review
The Company has made significant progress during the year
on its lead programme; the development of inhaled SNG001.
This included further positive scientific data from the analysis
of samples from the Phase II clinical trial; the formulation of
clear options for the delivery and the development of the
product; and substantial interaction with a number of potential
licensing partners.
SNG001 for asthma and COPD
For asthma and COPD patients, Synairgen’s inhaled SNG001
is being developed as a broad spectrum anti-viral therapy to
be taken at the onset of cold (or influenza) symptoms to boost
the lungs’ anti-viral defences. The objective is to treat and/or
attenuate a deterioration of asthma or COPD symptoms, by
limiting the spread of viral infections to the lung and prevent
life-threatening severe exacerbations that require intensive
treatment. As a measure of how severe respiratory viruses can
be for these patients, it has been reported that up to 80% of
asthma exacerbations are linked to common cold infections.
In a Phase II clinical trial, in the more severe patients, SNG001
has significantly reduced asthma symptoms, improved lung
function and produced an encouraging reduction in the
number of severe exacerbations.
During the year we have conducted further analysis of samples
of sputum (phlegm) from patients who were dosed with SNG001
in the Phase II trial. This work showed a significant reduction in
markers of inflammation and a significant increase in measurable
anti-viral activity in the lung during a cold infection. This is
important because it clearly demonstrates that the effects
observed in the clinical trial can be explained through the
expected mechanism of action.
During the same period we have also evaluated regulatory
options, assessed the market potential and health economic
factors, considered aerosol delivery device options and
conducted device development work. In addition, we have
considered different clinical trial options for both of the asthma
and COPD indications and discussed these with contract
research organisations. We have done this both in consultation
with and independently of potential partners.
Severe Viral Lung Infections
The clinical and non-clinical data we have generated in the
last few years provides a rationale for considering the use of
inhaled SNG001 in patients hospitalised with a severe viral lung
infection. We are discussing the potential for inhaled SNG001
in this area with various stakeholders including sections of the
US government.
Licensing Strategy
We are pleased with the progress to date of licensing
discussions. Whilst there can be no guarantee that an agreement
will be completed, we anticipate that the terms of a final
agreement will be in line with the Board’s expectations.
Future Opportunities
We use human tissue models of disease to conduct our research.
It was the use of these models by the academic founders of
Synairgen and their collaborators that led to the initial IFN-beta
deficiency discovery in asthma and COPD that the Company has
subsequently progressed into Phase II. During the last few years,
we have extensively and almost exclusively used this translational
research platform, including our Biobank of characterised human
tissue, to support the development of SNG001: increasing
the rationale; addressing questions about dose and different
viruses; and supporting biomarker testing. This technology and
Synairgen’s unique background/experience can add value to
other development opportunities for asthma and COPD. To
that end, we have identified a number of external discovery/
development programmes which will be reviewed in detail and
considered for in-licensing in coming periods.
Key performance indicators (‘KPIs’)
The Board considers that the most important KPIs are non-
financial and relate to the progress of the scientific programmes
which are discussed in the preceding section of this report.
The most important financial KPIs are the cash position and the
operating loss of the Group. At 31 December 2013 cash and
deposit balances amounted to £1.29 million (2012: £3.09 million)
and were above budgeted levels. The operating loss of £2.28
million (2012: £2.49 million) was also favourable to the budgeted
loss for the year.
3 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Recreating the human lung
in the laboratory
Cross section of culture
Epithelial cells (the cells that line
airways of the lung) obtained
from patients are grown in tissue
culture plates
Top down view of epithelial cells
grown at an air-liquid interface,
which develop cilia and secrete
mucus in the same way as
those in the human lung
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 4
Strategic Report (continued)
Financial Review
The Financial Review should be read in conjunction with the
consolidated financial statements of the Company and Synairgen
Research Limited (together the ‘Group’) and the notes thereto
on pages 23 to 36. The consolidated financial statements are
presented under International Financial Reporting Standards
as adopted by the European Union. The financial statements
of the Company continue to be prepared in accordance with
UK Generally Accepted Accounting Practice and are set out on
pages 37 to 40.
Statement of Comprehensive Income
The loss from operations for the year ended 31 December 2013
was £2.28 million (2012: £2.49 million). Research and development
expenditure for the year amounted to £1.29 million (2012: £1.51
million). The proportionate reduction in research and development
expenditure was due to the completion during 2012 of the asthma
Phase II study (SG005). The most significant items of continuing
research and development expenditure during the year have been
the analysis of data from SG005 and the planning/evaluation of
next stage of the interferon beta programme in asthma and COPD.
Other administrative costs for the year amounted to £0.99 million
and remained in line with the previous year (2012: £0.98 million).
The research and development tax credit for the year was £0.22
million (2012: £0.21 million). The loss after tax for the year was
£2.04 million (2012: £2.25 million) and the loss per share was 2.72p
(2012: loss of 3.12p).
Statement of Financial Position and cash flows
At 31 December 2013, net assets amounted to £1.58 million (2012:
£3.42 million), including net funds, as detailed below in Capital
structure and funding, of £1.29 million (2012: £3.09 million).
The principal elements of the £1.8 million decrease over the year
ended 31 December 2013 (2012: £0.26 million decrease) in net
funds were:
• Cash used in operations of £2.04 million (2012: £2.75 million
outflow);
• Research and development tax credits received of £0.24 million
(2012: £0.25 million);
• Investment into intangible assets (patents and licences)
£0.02 million (2012: £0.14 million); and
• Share issue proceeds (net of costs) £nil (2012: £2.35 million).
Capital structure and funding
The Group is funded by equity capital, reflecting the early stage
nature of its discovery and development programmes.
The Group considers its capital to be its total equity, which at 31
December 2013 amounted to £1.58 million (2012: £3.42 million).
The Group’s objectives when managing capital are to safeguard the
Group’s ability to continue as a going concern in order to provide
returns to equity holders of the Company and benefits to other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. The Group manages this objective through tight
control of its cash resources and, upon reaching significant drug
development programme milestones (to decrease investment risk),
by raising additional equity from shareholders to meet its forecast
future cash requirements.
Net funds held by the Group at 31 December 2013 amounted to
£1.29 million and comprised cash and cash equivalents, short-term
deposits (with original maturities of greater than three months and
less than one year) as shown below:
2013
£m
Short-term deposits
0.46
Cash and cash equivalents 0.83
1.29
Net funds
31 Dec
30 June
2012
£m
1.43
1.66
3.09
2011
£m
2.45
0.90
3.35
2011
£m
3.40
1.49
4.89
2010
£m
3.68
1.33
5.01
2009
£m
1.98
5.96
7.94
The Group did not have any bank borrowings as at 31 December
2013 (2012: £nil).
There have been five significant issues of shares with the following
amounts (net of costs) raised: £0.62 million (August 2003); £8.98
million (from IPO on AIM in October 2004); £6.20 million (June
2009); £2.50 million (June 2011); and £2.35 million (July 2012).
The other major sources of funding received by the Group from
the formation of the business until 31 December 2013 have been:
research and development tax credits of £2.46 million, bank
interest of £1.62 million, and revenues from collaborative work
of £0.60 million.
Fundraising post year-end
On 10 March 2014, the Company raised £1.5 million (gross) for
working capital purposes by issuing 3,125,000 new ordinary
shares at 48p each.
Treasury policy and financial risk management
Credit risk
The Group follows a risk-averse policy of treasury management.
Sterling deposits are held with one or more approved UK-
based financial institutions and in the Institutional Cash Series
plc Institutional Sterling Liquidity Fund managed by BlackRock
Investment Management (UK) Limited. The Group’s primary
treasury objective is to minimise exposure to potential capital
losses whilst at the same time securing prevailing market rates.
Interest rate risk
The Group’s cash held in current bank accounts is subject to the risk
of fluctuating base rates. An element of the Group’s financial assets
is placed on fixed-term interest deposits. The interest rate profile of
financial assets is illustrated in note 16 to the financial statements.
Currency risk
During the year under review, the Group was exposed to
Euro and US dollar currency movement as a small element
of its research and development expenditure is denominated
in these currencies. The Group does not routinely hedge
against this exposure.
5 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Principal risks and uncertainties
The Board considers that the principal risks and uncertainties
facing the Group may be summarised as follows:
• Reliance on the interferon beta programmes
All of the Group’s resources are focused on the three interferon
beta programmes. Whilst these are three separate indications
(asthma, COPD and severe viral lung infections), there is a risk
that failure in one indication may have a negative impact upon
the others.
• Failure to generate innovative discoveries
There can be no guarantee that the Group will successfully
develop new pharmaceutical products.
• Loss of the Biobank
The Group’s Biobank of well-characterised human tissue, which
has been built up over several years, is a key element of its
technology platform and is very important in relation to the
development of future opportunities.
The Group follows a defined policy to minimise the chances of
loss of the Biobank, including storing it in a number of different
locations at Southampton General Hospital and monitoring the
storage temperature 24 hours a day.
• Clinical development and regulatory risk
The development of pharmaceutical drugs requires the necessary
safety and efficacy to be demonstrated in clinical programmes
in order to meet the requirements of the appropriate regulatory
bodies. There can be no guarantee that the necessary safety or
efficacy will be demonstrated or that the clinical trials will not be
delayed or extended. There can be no guarantee that any of the
Group’s therapies will be able to obtain or maintain the necessary
regulatory approvals.
The Group seeks to reduce this risk by closely monitoring the
progress of recruitment on its clinical trials, drawing on the
experience of its Founders, seeking advice from regulatory
advisers, and holding consultations with the appropriate
regulatory bodies.
• Intellectual property risk
The commercial success of the Group depends on its ability to
obtain patent protection for its pharmaceutical discoveries in the
US, Europe and other countries and to preserve the confidentiality
of its know-how. There is no guarantee that patent applications
will succeed or be broad enough to provide protection for the
Group’s intellectual property rights and exclude competitors with
similar pharmaceutical products. The success of the Group is also
dependent on non-infringement of patents, or other intellectual
property rights, held by third parties. Competitors and third parties
may hold intellectual property rights which the Group may not be
able to license upon favourable terms, potentially inhibiting the
Group’s ability to develop and exploit its own business. Litigation
may be necessary to protect the Group’s intellectual property
which may result in substantial costs.
The Group seeks to reduce this risk by seeking patent attorney
advice that patent protection will be available prior to investing in
a project, by seeking patent protection where appropriate and by
minimising disclosure to third parties.
• Commercial risk
There can be no guarantee that the Group will succeed in securing
and maintaining the necessary contractual relationships with
licensing partners for its programmes under development. Even if
the programmes are successfully out-licensed and pharmaceutical
products are brought to market by a partner, there is no guarantee
that such products will succeed in the marketplace.
The Group seeks to reduce this risk by structuring its development
programmes to meet the needs and requirements of its potential
partners and by engaging with partners who have the appropriate
experience, resource and interest to bring such pharmaceutical
products to the global marketplace.
• Competition risk
The Group’s current and potential competitors include
pharmaceutical and biotechnology companies and academic
institutions, many of whom have significantly greater financial
resources than the Group. There can be no assurance that
competitors will not succeed in developing products that are more
effective or economic than any developed by the Group, or which
would render the Group’s products non-competitive or obsolete.
• Funding risk
The Group continues to consume cash resources. Until the
Group generates positive net cash inflows from successful out-
licensing transactions and commercialisation of its products, it
remains dependent upon securing additional funding through
the injection of capital from share issues. The Group may not be
able to generate positive net cash flows in the future or attract
such additional funding required at all, or on suitable terms. In
such circumstances, the Group’s discovery and development
programmes may be delayed or cancelled and the business
operations curtailed.
The Group seeks to reduce this risk through tight financial control,
prioritising programmes which will generate the best returns and
keeping shareholders informed on progress.
• Dependence on Founders, senior management and key staff
The Founders and certain members of staff are highly skilled
scientists and clinicians. The Group has deliberately pursued a
lean headcount policy to conserve financial resources. Failure to
continue to attract and retain such individuals could adversely
affect operational results.
The Group seeks to reduce this risk by appropriate incentivisation
of staff through participation in long term equity incentive schemes.
By order of the Board
John Ward
Company Secretary
19 March 2014
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 6
Scientific Review – Improving the
likelihood of success in drug development
Prof. Stephen
Holgate
Non-executive Director
Dr Phillip Monk
Chief Scientific Officer
Only one in six drugs that enter
clinical development will be
registered for clinical use1.
The drug development process usually comprises three clinical
phases prior to an application for a marketing authorisation:
• Phase I trials are conducted in a small number of patients
(20 – 80) and are focussed on safety.
• Phase II trials are conducted in a larger group (up to a few
hundred) and are designed to test proof of principle or concept,
looking for evidence that the agent has engaged the proposed
therapeutic target producing a beneficial effect on a relevant
disease outcome measure, as well as providing further evidence
of safety.
• Phase III trials are conducted in larger numbers of patients still
(from a few hundred to several thousand) and are aimed at
confirming efficacy with statistical significance in different patient
populations using a range of outcome measures and to gain
information on rarer side effects.
Greatest attrition in the drug development process occurs in
Phase II proof of concept studies, where drugs often fail due to
lack of efficacy or safety concerns. By this stage, two to three
years of clinical development and significant investment has been
made in the development programme. Improving the predictability
of preclinical studies for a positive clinical outcome, a key element
of ‘Translational Medicine’, is crucial to reducing the risk of failure
at Phase II and beyond, by ensuring that the right drug targets are
selected prior to initiation of costly late-stage clinical development
7 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
and that they are evaluated in a patient population which is likely to
respond to the specific treatment.
Human tissue models are more likely to be predictive of
clinical outcome
Traditionally, many drug targets in respiratory disease have been
selected on the basis of activity in animal models, which were
considered to replicate some aspects of diseases such as asthma
or COPD, but not the whole disease.
There are a number of difficulties with this approach2. Whilst
certain disease mechanisms can be modelled, it is difficult, if not
impossible, to model the complexity of chronic diseases such as
asthma and COPD, that develop over many years as a function
of an individual’s genetic makeup and environmental factors
operating over the life-course. Fundamental differences in biology
between animals and humans can also be problematic. For
example, salbutamol is an important drug used in the treatment
of asthma (Ventolin® manufactured by GSK is probably the best
known branded asthma product). Taken by inhaler, salbutamol
acts quickly to relax airway smooth muscle and overcome the
bronchospasm characteristic of asthma. Similarly, in the laboratory
salbutamol relaxes the airways in a human lung tissue model
in one to two minutes3. However, in a rat lung tissue model,
salbutamol is not only much less potent but also opens airways
much more slowly (longer than 15 minutes). As a fast onset
of action is key to the efficacy of salbutamol in relieving acute
bronchospasm in asthma, it would not have been selected on
the basis of this rodent model.
Using patient samples to select the right patient population
for a drug target
It is increasingly recognised that not all patients will gain the same
benefit from a particular treatment for a variety of reasons, not
least of which is the expression of different disease pathways (or
endotypes) in different patients. This is the basis of personalised,
P4 or stratified medicine4. Under such circumstances, enriching a
clinical trial population for patients who are most likely to respond
best to treatment rather than treating all-comers increases the
chance of success, particularly early in the clinical development
programme in trials with fewer patients5.
For example, preclinical studies in animal models suggested
that the airways pro-inflammatory and remodelling protein
interleukin-13 (IL-13) may be an important target for the treatment
of asthma. As a consequence a number of therapeutic antibodies
targeting IL-13 are in clinical development. To determine whether
IL-13 is an important mediator in less well controlled asthma,
researchers measured levels of IL-13 in airway secretions collected
from patients with severe asthma. They found that only around
40% of patients had detectable levels of IL-13, suggesting
that not all patients with severe asthma would benefit from a
treatment targeting IL-135, 6. Two Phase II clinical studies have
been conducted in asthma with anti-IL-13 antibody therapeutics
in which clinical responses were evaluated in a subset of the trial
populations with detectable IL-13 in sputum samples or elevated
levels of an IL-13 sensitive biomarker in blood7, 8. In both cases,
clinical response to treatment was better than in the unselected
and heterogeneous trial population.
Another example in the respiratory field is development of
mepolizumab, a therapeutic antibody targeting IL-5. IL-5 is a pro-
inflammatory protein involved in the recruitment and activation of
eosinophils, thought to be an important inflammatory cell type
in asthma. Early trials with mepolizumab yielded disappointing
results9. However, more recent trials, in which the study
populations were enriched for patients with signs of eosinophilic
inflammation, have shown mepolizumab to be an effective therapy
in the right target population10.
Synairgen’s translational research platform
Synairgen’s founders, Professors Stephen Holgate, Ratko
Djukanovic and Donna Davies, were among the first academic
groups to develop human cell and tissue models in the respiratory
disease area11. They played an instrumental role in establishing
the translational research platform at Synairgen because they
had access to diseased patients, the facilities to obtain biological
samples from their airways and use these to develop disease
related models in vitro at the University of Southampton’s School
of Medicine. Taking advantage of this unique setting, over the
last decade Synairgen has established and continues to add to a
Biobank of blood, sputum, lung cells and tissue samples collected
from clinically well-characterised subjects with asthma and COPD
and controls. These samples, stored in accordance with the
requirements of the Human Tissue Authority, have been used
to create in vitro human disease models of allergen challenge,
cigarette smoke exposure, oxidant damage and respiratory virus
infection, factors which are associated with exacerbations of
respiratory disease.
It was observations made in cell models such as these which
revealed that cells lining the airways of asthmatics (epithelial cells)
were more susceptible to infection with common respiratory
viruses such as those causing the common cold on account of
References
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beta12. The fact that this deficiency could be repaired by addition
of a small amount of exogenous interferon beta in the in vitro
asthma and COPD models provided the basis for the development
of inhaled interferon beta as a novel treatment for respiratory virus
induced exacerbations of respiratory disease. It is noteworthy
that such a deficiency in immune response would not have been
identified in animal models of respiratory disease12, although
once the defective pathway has been identified, pathway-specific
models can be generated in mice to recapitulate events in the
human disease13.
Identifying new development opportunities
Having validated its translational platform through the interferon
beta programme, Synairgen now aims to use its unique models
to screen potential in-licensing opportunities in the respiratory
disease or respiratory viral areas where there remains substantial
unmet clinical need in complex diseases. The Biobank and
disease models have the potential to enable Synairgen to identify
the most relevant novel drug targets and reposition existing
drugs, aiming them at patient populations who are more likely to
gain significant clinical benefit. Identification of the appropriate
responder population based on well characterised biomarkers
will greatly assist the drug development process in the clinic.
Furthermore a more targeted intervention will direct precious
healthcare expenditure to those patients more likely to benefit
from therapy.
Professor Stephen Holgate CBE
Founder and Non-executive Director
Dr Phillip Monk
Chief Scientific Officer
19 March 2014
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Biopharm. 2013 Jun; 84(2): 394-400.
12. Wark PA, Johnston SL, Bucchieri F, Powell R,
Puddicombe S, Laza-Stanca V, Holgate ST,
Davies DE. Asthmatic bronchial epithelial cells
have a deficient innate immune response to
infection with rhinovirus. J Exp Med. 2005 Mar
21; 201(6): 937-47.
13. Zhang SY, Herman M, Ciancanelli MJ,
Pérez de Diego R, Sancho-Shimizu V, Abel L,
Casanova JL. TLR3 immunity to infection in
mice and humans. Curr Opin Immunol. 2013
Feb; 25(1): 19-33.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 8
Synairgen is licensed by the Human Tissue Authority to
store and use its Biobank of human tissue for its research
1
2
1
Biobank samples are
obtained from volunteer
patients attending
specialist clinical research
facilities at Southampton
General Hospital
2
Synairgen’s Biobank
contains blood, sputum,
lung cells and tissue
samples collected from
subjects with asthma and
COPD and controls
9 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
3a
Biobank samples are
used to create in vitro
human respiratory cell and
tissue models to discover,
develop and validate novel
drug targets
3b
Image of cultured epithelial
cells grown at an air-liquid
interface showing cilia
and mucus-secreting cells
(refer to page 4)
3a
3b
© Dr. Richard Kessel & Dr. Randy Kardon/Visuals Unlimited, Inc
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 10
Directors
Simon Shaw
Non-executive Chairman
Simon Shaw joined Synairgen as executive Chairman on its inception in June
2003 and became non-executive Chairman in October of that year. He is
Group Chief Financial Officer of Savills plc. He was Chief Financial Officer of
Gyrus Group PLC from 2003 until its sale to Olympus Corporation in 2008,
having previously been Chief Operating Officer of Profile Therapeutics plc
between 1998 and 2003. Between 1991 and 1997 he was a corporate
financier, latterly at Hambros Bank Limited. He is a chartered accountant.
Richard Marsden
Chief Executive Officer
Richard Marsden joined Synairgen in a consulting role as General Manager
in November 2003, was appointed to the Board as Managing Director
in June 2004 and appointed Chief Executive Officer in September 2009.
Between 1998 and 2003 he worked as Projects Manager and Cystic
Fibrosis Business Development Manager at Profile Therapeutics plc, where
he managed the cystic fibrosis business and played a major role in the
development of its proprietary pharmaceutical unit, Profile Pharma Limited.
Prior to this, he worked for Zimmer Limited, Genentech (UK) Limited and
Roche Products Limited.
Dr Phillip Monk
Chief Scientific Officer
John Ward
Finance Director
Phillip Monk joined Synairgen in October 2006 as Head of Bioscience
Development and was appointed to the Board as Chief Scientific Officer
in September 2009. Phillip was previously Director of the Respiratory and
Inflammation Biology group at Cambridge Antibody Technology (‘CAT’)
and led the scientific development of CAT-354, an anti-IL-13 antibody
being developed for the treatment of severe asthma. Prior to joining CAT,
he worked at Bayer AG within the respiratory disease therapeutic area,
focusing on the development of novel therapies for asthma, COPD and
cystic fibrosis.
John Ward joined Synairgen in October 2004 as Finance Director. From
December 1999 to July 2004 he was Chief Financial Officer and Company
Secretary of Profile Therapeutics plc and was appointed to the Profile
Therapeutics board in March 2003. From 1996 to 1999 he was Finance
Director of Rapid Deployment Group Limited, the UK holding company
for the healthcare operations of Ventiv Health, Inc. Prior to joining Rapid
Deployment he was a Director of Corporate Finance at Price Waterhouse.
He is a chartered accountant.
11 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Iain Buchanan
Non-executive Director
Dr Bruce Campbell
Non-executive Director
Iain Buchanan was appointed as a non-executive director in June 2010
and is currently Chief Executive Officer of NOXXON Pharma AG based in
Berlin. Previously he was Chief Executive Officer of Novexel SA (‘Novexel’),
a specialty pharmaceutical company focused on novel anti-infectives, from
its formation in 2004 until 2010, when it was sold to AstraZeneca. He has
some 35 years’ commercial experience in the pharmaceutical and biotech
industries. He joined Novexel from Vertex Pharmaceuticals (Europe) Limited,
where he was Managing Director. Prior to Vertex, Iain was the Regional
Licensing Director of Cilag A.G. International, a division of Johnson &
Johnson based in Switzerland, where he managed Cilag's international
licensee business from 1987 to 1994.
Bruce Campbell joined Synairgen as a non-executive Director in April 2006.
He has 40 years of drug development experience and has developed
many drugs in a wide range of indications which are now on the market.
He is currently a scientific advisor to IP Group plc and acts as a consultant
to various companies including Proximagen Limited. Formerly he was
Senior VP of International Development at Neurocrine Biosciences, Inc.
('Neurocrine'). Prior to joining Neurocrine he worked for 27 years at Servier
(United Kingdom), latterly as Scientific Director. In addition, he has also been
a director and European Chairman of the Drug Information Association
and a member of the European ICH Safety Working Party. He is a visiting
Professor in Pharmacology at King's College, London.
Paul Clegg
Non-executive Director
Prof. Stephen Holgate CBE
Non-executive Director
Paul Clegg was appointed as a non-executive director in September 2009.
He is Chief Executive Officer of Accsys Technologies PLC, Chairman of
Tricoya Technologies Ltd and a non-executive director of Peel Hunt LLP.
Paul was previously Managing Director and Chief Executive Officer of
Cowen International Limited and director of Cowen Asset Management
Limited until June 2008. Paul has over twenty years’ senior investment
banking experience.
Stephen Holgate is a co-founder of Synairgen and was appointed a non-
executive director in June 2003. After qualifying in Medicine at Charing
Cross Hospital Medical School, London he has pursued an academic
career leading to his appointment in 1987 to his current position as Medical
Research Council Clinical Professor of Immunopharmacology at the
University of Southampton. His research interests have been largely focused
on the cellular and molecular mechanisms of asthma that has involved use
of both epidemiological and genetic approaches. He has published over 950
papers in peer-reviewed literature. He is currently Member of the Science
Europe Medical Committee; Chairman of the European Respiratory Society
Scientific Council; Board Chair of National Centre for the Replacement,
Refinement and Reduction of Animals in Research (NC3Rs); Chairman
of Defra’s Hazardous Substances Advisory Committee; Member of the
Department of Health Committee on the Medical Effects of Air Pollution;
and a scientific board member or advisor to a number of companies,
including Amgen, Takeda, Merck, and Novartis. In 2010, he was appointed
by the Higher Education Funding Council for England to be the Chair of the
Research Excellence Framework (REF2014) Main Panel A covering Medicine,
Health and Life Sciences.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 12
Synairgen’s Founders
and Scientific Advisors
Synairgen’s Founders
Prof. Ratko Djukanovic
is Professor of Medicine
at the University of
Southampton and Director
of the Southampton NIHR
Respiratory Biomedical
Research Unit
Prof. Stephen Holgate CBE
is MRC Clinical Professor
of Immunopharmacology
at the University of
Southampton
Prof. Donna Davies
is Professor of
Respiratory Cell and
Molecular Biology
at the University of
Southampton
13 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Directors’ Report
The directors present their report and the audited financial statements
for Synairgen plc (the ‘Company’) and its subsidiary (together the
‘Group’) for the year ended 31 December 2013.
There are a number of items required to be included in the Directors’
Report, which are covered elsewhere in the annual report.
The following are covered in the Strategic Report:
• Principal activities
• Review of the business and future developments
• Key performance indicators
• Principal risks and uncertainties
• The use of financial instruments and financial risk management
policies (also in note 16 to the financial statements)
Details of directors’ remuneration and share options are given in the
Directors’ Remuneration Report.
Research and development
During the year ended 31 December 2013, the Group has invested
£1,292,000 (2012: £1,508,000) in research and development activities
and a review of this expenditure is included in the Strategic Report.
Dividends
The directors do not propose the payment of a dividend.
Substantial shareholdings
As at 19 March 2014, the Company had been advised of the following
shareholders with interests of 3% or more in its ordinary share capital:
Name of shareholder
Number of
ordinary shares
% of share
capital
Lansdowne Partners Limited
IP Group plc
F&C Asset Management plc
IP Venture Fund
Mr MR Underwood
Southampton Asset Management Limited
Polar Capital LLP
15,023,111
8,562,894
6,552,505
5,706,390
3,970,588
3,600,000
2,360,115
19.2%
10.9%
8.4%
7.3%
5.1%
4.6%
3.0%
Directors
The directors of the Company during the year ended 31 December
2013 were:
Other
Scientific Advisors
Prof. Sebastian Johnston
is Professor of Respiratory
Medicine & Allergy at the
National Heart and Lung Institute,
Imperial College, London
Prof. Wisia Wedzicha is
Professor of Respiratory
Medicine at UCL Medical School
and her work is centered on
the causes and mechanisms of
COPD exacerbations
Executive Directors:
Richard Marsden
Dr Phillip Monk
John Ward
Non-executive Directors:
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate CBE
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 14
Directors’ Report
(continued)
Corporate Governance
Directors’ interests in ordinary shares
The directors, who held office at 31 December 2013, had the
following interests in the ordinary shares of the Company:
1 January and 31 December 2013
Number of shares
Richard Marsden
Dr Phillip Monk
John Ward
Simon Shaw (i)
Iain Buchanan
Dr Bruce Campbell
Paul Clegg (ii)
Prof. Stephen Holgate (iii)
110,972
28,592
243,912
1,408,879
112,741
294,259
204,244
858,360
(i) Simon Shaw’s shareholding includes 40,299 shares held in his pension plan.
(ii) Paul Clegg’s shareholding includes 180,149 shares held in his pension plan.
(iii) Prof. Stephen Holgate’s shareholding includes 1,923 shares owned by his wife,
Elizabeth Holgate.
Between 31 December 2013 and the date of this report there
has been no change in the interests of directors in shares or
share options as disclosed in this report.
Directors’ and officers’ liability insurance
Qualifying indemnity insurance cover has been arranged in
respect of the personal liabilities which may be incurred by
directors and officers of the Group during the course of their
service with the Group. This insurance has been in place during
the year and on the date of this report.
Post balance sheet events
On 10 March 2014, the Company raised £1,500,000 (gross)
for working capital purposes by issuing 3,125,000 1p ordinary
shares at a price of 48p per share.
Political donations
During the year ended 31 December 2013, the Group made no
political donations (2012: £nil).
Auditors
All of the current directors have taken all the steps that
they ought to have taken to make themselves aware of any
information needed by the Company's auditors for the purposes
of their audit and to establish that the auditors are aware of that
information. The directors are not aware of any relevant audit
information of which the auditors are unaware.
By order of the Board
John Ward
Company Secretary
19 March 2014
15 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
The Board is accountable to the Company’s shareholders for
good corporate governance and it is the objective of the Board to
attain a high standard of corporate governance. As an AIM-quoted
company, full compliance with The UK Corporate Governance
Code (the ‘Code’) is not a formal obligation. The Company has not
sought to comply with the full provisions of the Code, however it
has sought to adopt the provisions that are appropriate to its size
and organisation and establish frameworks for the achievement of
this objective. This statement sets out the corporate governance
procedures that are in place.
Board of Directors
On 31 December 2013 the Board of directors (the ‘Board’)
consisted of a non-executive Chairman (Simon Shaw), three
executive directors (Richard Marsden, Dr Phillip Monk and John
Ward), and four non-executive directors (Iain Buchanan, Dr
Bruce Campbell, Paul Clegg and Prof. Stephen Holgate). Brief
details about the directors are given on pages 11 and 12. The
responsibilities of the non-executive Chairman and the Chief
Executive Officer are clearly divided. The non-executive directors
bring relevant experience from different backgrounds and receive
a fixed fee for their services and reimbursement of reasonable
expenses incurred in attending meetings.
The Board retains full and effective control of the Group. This
includes responsibility for determining the Group’s strategy and
for approving budgets and business plans to fulfil this strategy.
The full Board ordinarily meets bi-monthly. It also meets on any
other occasions it considers necessary. During the year ended
31 December 2013, the Board met nine times, with each member
attending as follows:
Director
Simon Shaw
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate
Number of meetings held
whilst a Board member
Number of
meetings attended
9
9
9
9
9
9
9
9
9
9
8
9
8
7
9
2
It is the duty of the Chairman to ensure that all directors are properly
briefed on issues arising at Board meetings. Prior to each Board
meeting, directors are sent an agenda and Board papers for each
agenda item to be discussed. Additional information is provided
when requested by the Board or individual directors.
The Company Secretary is responsible to the Board for ensuring
that Board procedures are followed and that the applicable rules
and regulations are complied with. All directors have access to the
advice and services of the Company Secretary, and independent
professional advice, if required, at the Company’s expense. Removal
of the Company Secretary would be a matter for the Board.
As appropriate, the Board has delegated certain responsibilities
to Board committees.
Corporate Governance
Audit Committee
The Audit Committee currently comprises Simon Shaw (Chairman),
Iain Buchanan and Dr Bruce Campbell. Whilst it is not normal
in larger companies for the chairman of the Company to chair
the Audit Committee, the Company considers it appropriate for
Simon Shaw to be Chairman as he is considered to have the most
significant, recent and relevant financial experience of the non-
executive directors.
The committee has primary responsibility for ensuring that the
financial performance of the Group is properly measured and
reported on and it reviews the interim financial information and
annual financial statements before they are submitted to the
Board. The committee reviews accounting policies and material
accounting judgements. The committee also reviews, and reports
on, reports from the Group’s auditors relating to the Group’s
accounting controls. It makes recommendations to the Board
on the appointment of auditors and the audit fee. The committee
monitors the scope, results and cost-effectiveness of the audit.
It has unrestricted access to the Group’s auditors. In certain
circumstances it is permitted by the Board for the auditors to supply
non-audit services (in the provision of tax advice, or on specific
projects where they can add value).
The committee has approved and monitored the application of this
policy in order to safeguard auditor objectivity and independence.
The overall fees paid to the auditors are not deemed to be of such
significance to them as to impair their independence. The Group
does not have an internal audit function, but the Board considers
that this is appropriate, given the size of the Group. The committee
keeps this matter under review annually. During the year ended
31 December 2013, the committee met four times with each
member attending as follows:
Director
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Number of meetings held
whilst a Committee member
Number of
meetings attended
4
1
4
4
1
3
Remuneration and Nomination Committee
The Remuneration and Nomination Committee currently comprises
Paul Clegg (Chairman), Dr Bruce Campbell and Simon Shaw. The
committee is responsible for making recommendations to the Board
on remuneration policy for executive directors and the terms of their
service contracts, with the aim of ensuring that their remuneration,
including any share options and other awards, is based on their
own performance and that of the Group generally. The committee
administers the Long-Term Incentive Plan, the staff share option
scheme and the Qualifying Non-Employee Option Scheme and
approves grants under all three schemes. It also advises on the
remuneration policy for the Group’s employees. The committee is
responsible for all senior appointments that are made within the
Group. During the year ended 31 December 2013, the committee
met four times and all meetings were attended by Paul Clegg,
Dr Bruce Campbell and Simon Shaw.
Investor relations
The directors seek to build a mutual understanding of objectives
between the Company and its shareholders by meetings with major
institutional investors and analysts after the Company’s preliminary
announcement of its year-end results and its interim results. The
Company also maintains investor relations pages on its website
(www.synairgen.com) to increase the amount of information
available to investors.
There is an opportunity at the Annual General Meeting for individual
shareholders to question the Chairman, the Chairmen of the Audit
and Remuneration and Nomination committees, and the executive
directors. Notice of the meeting is sent to shareholders at least
21 clear days before the meeting. Shareholders are given the
opportunity to vote on each separate issue. The Company counts
all proxy votes and will indicate the level of proxies lodged on each
resolution, after it has been dealt with by a show of hands. Details of
the resolutions and explanations thereto are included with
the notice.
Internal control
The directors are responsible for establishing and maintaining the
Group’s system of internal control and reviewing its effectiveness.
The system of internal control is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and can
only provide reasonable but not absolute assurance against material
misstatement or loss.
The main features of the internal control system are as follows:
• a control environment exists through the close management of
the business by the executive directors. The Group has a defined
organisational structure with delineated approval limits. Controls
are implemented and monitored by personnel with the necessary
qualifications and experience;
• a list of matters reserved for board approval;
• monthly management reporting and analysis of variances;
• financial risks for each major transaction are identified and
evaluated by the Board; and
• standard financial controls operate to ensure that the assets of
the Group are safeguarded and that proper accounting records
are maintained.
By order of the Board
John Ward
Company Secretary
19 March 2014
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 16
Directors’ Remuneration Report
This report is non-mandatory for AIM-quoted companies and has
been produced on a voluntary basis. It includes and complies with
the disclosure obligations of the AIM Rules.
Remuneration Committee
The Company’s remuneration policy is the responsibility of the
Remuneration and Nomination Committee (the ‘Committee’), which
was established in October 2004. The terms of reference of the
Committee are outlined in the Corporate Governance Statement
on page 16. The members of the Committee are Paul Clegg
(Chairman), Simon Shaw and Dr Bruce Campbell.
The Committee, which is required to meet at least twice a year, met
four times during the year ended 31 December 2013. The Chief
Executive Officer and certain executives may be invited to attend
meetings of the Committee to assist it with its deliberations, but no
executive is present when his or her own remuneration is discussed.
During the year, the Committee has been advised on director
remuneration by its retained independent remuneration adviser, FIT
Remuneration Consultants LLP. No other advice has been provided
to the Group by this firm during the year.
Remuneration policy
(i) Executive remuneration
The Committee has a duty to establish a remuneration policy which
will enable it to attract and retain individuals of the highest calibre to
run the Group. Its policy is to ensure that the executive remuneration
packages of executive directors and the fee of the Chairman are
appropriate given performance, scale of responsibility, experience,
and consideration of the remuneration packages for similar
executive positions in companies it considers to be comparable.
Packages are structured to motivate executives to achieve the
highest level of performance in line with the best interests of
shareholders. A significant element of the total remuneration
package, in the form of bonus and LTIP awards,
is performance driven.
Executive remuneration currently comprises a base salary, an
annual performance-related bonus, a pension contribution to the
executive director’s individual money purchase scheme (at 9% of
base salary), family private health cover, permanent health and
life assurance. Salaries and benefits were last reviewed in July
2012. As indicated in last year’s report, salaries and benefits will
now be reviewed annually during the first quarter of the year with
any increases taking effect from 1 January, taking into account
Group and individual performance, external benchmark information
and internal relativities. The Company operates a discretionary
bonus scheme for executive directors for delivery of exceptional
performance against personal and corporate objectives, with the
maximum bonus payable remaining at 200% of base salary. No
bonuses were payable to executive directors in respect of the year
ended 31 December 2013 and there were no pay rises awarded to
executive directors in 2013. The 2014 review will be disclosed in next
year’s report.
Executive directors are also rewarded for improvements in the
performance of the Group sustained over a period of years in the
form of Long-Term Incentive Plan share awards granted on
a discretionary basis by the Committee.
17 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Directors’ remuneration for the year ended 31 December 2013 is set
out on pages 19 and 20 of this document.
(ii) Chairman and non-executive Director remuneration
The Chairman, Mr Buchanan and Mr Clegg receive a fixed fee
of £25,000 per annum. Dr Campbell and Professor Holgate
receive a fixed fee of £15,000 per annum. The fixed fee covers
preparation for and attendance at meetings of the full Board and
committees thereof. A fee of £5,000 per annum is also paid for
chairing each of the audit and remuneration committees. The
Chairman and the executive directors are responsible for setting
the level of non-executive remuneration. These fees remain
unchanged from 1 September 2009. The non-executive directors
are also reimbursed for all reasonable expenses incurred in
attending meetings.
(iii) Equity-based incentive schemes
The Committee strongly believes that equity-based incentive
schemes increase the focus of employees in improving Group
performance, whilst at the same time providing a strong incentive
for retaining and attracting individuals of a high calibre.
Long-Term Incentive Plan (‘LTIP’)
The Synairgen Long-Term Incentive Plan, comprising conditional
(performance-related) share awards (technically structured as
nominal cost options pursuant to which participants must pay
1p per share on the exercise of their awards), was introduced in
2005 as the sole ongoing long-term incentive vehicle for executive
Directors. Senior executives and other employees may be granted
an award which will normally vest if demanding performance
conditions are achieved over a three-year period and if the grantee
remains an employee of the Group.
Grants under the LTIP in any financial year are capped at a
maximum of 100% of base salary. In March 2013, Richard Marsden,
Dr Phillip Monk and John Ward were granted awards over shares
worth 100% of base salary. Executive directors are expected to
retain no fewer than 50% of shares acquired upon vesting of awards
under the LTIP, net of taxes, until such time as, in combination
with any other shares the executives may have acquired, they hold
shares with a value equivalent to 100% of base salary.
All awards will lapse at the end of the applicable performance period
to the extent that the applicable performance criteria conditions
have not been satisfied with no opportunity for retesting. In the event
of a good leaver event or a change of control of the Company, the
LTIP awards may vest early, but only to the extent that, in the opinion
of the Committee, the performance conditions have been satisfied
at that time. The awards will generally also be subject to a time pro-
rated reduction to reflect the reduced period of time between the
grant of the awards and the time of vesting although this reduction
may not be applied in certain cases.
Performance conditions for the 2010, 2011 and 2013 LTIP awards
The performance conditions for all three awards were the same.
The awards are subject to two conditions. Firstly, awards will
only vest to the extent that the percentage increase in the total
shareholder return (‘TSR’, being the return earned by a shareholder
over the performance period in terms of change in the share price
and assuming re-investment of any dividends in more shares at the
prevailing price on the relevant ex-dividend date) of the Company
over the three year performance period is equal or greater than the
percentage increase in the techMARK mediscience™ index over the
same period as follows:
TSR growth over the performance period
less percentage increase in the techMARK
mediscience™ index over the same period
Vesting percentage
of total number of shares
subject to award
Less than 0%
0%
10%
20%
Performance between the steps
0%
25%
50%
100%
Pro-rata on a straight-line basis
Secondly, no award will vest unless the average annual growth in
the TSR of the Company over the performance period is equal to or
greater than RPI plus 2% or, for more than 75% of an award to vest,
annual average TSR must exceed RPI by at least 5% rather than 2%.
Vesting of 2010 LTIP awards
In September 2013, the awards granted in 2010 vested at 49.48%.
The TSR growth over the three year performance period amounted
to 90.46% and the percentage increase in the techMARK
mediscience index over the same period was 80.67%, resulting in
an outperformance by 9.79%, thus resulting in a vesting percentage
of 49.48% for the first performance condition. For the second
performance condition, the TSR increase of 90.46% was in excess
of the 17.80% (inflation plus 6%), resulting in the maintained vesting
of 49.48% from the first performance condition.
Qualifying Non-Employee Option Scheme (‘QNEOS’)
On 12 June 2009 shareholders in General Meeting approved the
adoption of the QNEOS. This plan is a discretionary share scheme
which enables the Committee to grant market value share options
to consultants and non-executive directors who, in the opinion of the
Committee, make, or, in the case of new appointments, will make,
a significant contribution to the Group and where the Committee
considers it to be in the interests of shareholders to make such grants.
During the year under review no options were granted under the QNEOS.
Vesting of 2010 QNEOS award
In June 2013 the award made in June 2010 vested in full. The award
of options was made to a non-executive director of the Company
(Mr Buchanan) which was subject to a performance condition
whereby if TSR during the three year period exceeded 30% then the
award would vest in full. The actual TSR achieved was 66.17% and
therefore the award vested in full.
(iv) Service contracts and letters of appointment
The executive directors have entered into service agreements which
can be terminated on six months’ notice by either party.
During the year, Richard Marsden continued to act as a non-
executive director of Southampton Asset Management Limited but
did not receive any fees with regards to this appointment. None of
the other executive directors held non-executive directorships with
other companies.
The Chairman and non-executive directors have entered into
letters of appointment for an initial fixed period of twelve months,
which renew automatically for a further twelve month period on the
anniversary of commencement. The appointment can be terminated
on three months’ notice by either party.
Directors’ interests in share options
The interests of Directors in share options over ordinary shares during the year were as follows:
Synairgen Long-Term Incentive Plan
Date of grant
At 1 January 2013
Granted during
the year
Lapsed
At 31 December 2013
Exercise
price
Earliest
exercise date
Expiry date
Richard Marsden
7 September 2009
8 September 2010
21 September 2011
11 March 2013
Dr Phillip Monk
7 September 2009
8 September 2010
21 September 2011
11 March 2013
John Ward
7 September 2009
8 September 2010
21 September 2011
11 March 2013
605,000
498,969
538,063
–
414,625
371,134
400,212
–
550,000
453,608
489,148
–
–
–
–
245,732
–
–
–
182,776
–
–
–
223,393
–
252,080
–
–
–
187,497
–
–
–
229,163
–
–
605,000
246,889
538,063
245,732
414,625
183,637
400,212
182,776
550,000
224,445
489,148
223,393
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
7 Sept 2012
8 Sept 2013
21 Sept 2014
11 Mar 2016
6 Sept 2019
7 Sept 2020
20 Sept 2021
10 Mar 2023
7 Sept 2012
8 Sept 2013
6 Sept 2019
7 Sept 2020
21 Sept 2014
20 Sept 2021
11 Mar 2016
10 Mar 2023
7 Sept 2012
8 Sept 2013
21 Sept 2014
11 Mar 2016
6 Sept 2019
7 Sept 2020
20 Sept 2021
10 Mar 2023
The options awarded in September 2011 and 2013 under the LTIP will only vest if the performance conditions outlined above are met. The
exercise of the options awarded in September 2009 (which vested in 2012) and in September 2010 (which vested in 2013) is generally subject to
the relevant option holder continuing to be an employee or director of a company in the same Group as the Company at the relevant time.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 18
Directors’ Remuneration Report (continued)
Other options granted on or before the IPO or under the Synairgen
plc Staff Option Scheme
Date of grant
Richard Marsden
11 October 2004
11 October 2004
26 October 2004
26 October 2004
Dr Phillip Monk
2 October 2006
John Ward
26 October 2004
26 October 2004
At 1 January and
31 December
2013
Exercise
price
Earliest
exercise
date
Expiry
date
280,000
140,000
140,000
140,000
10p
10p
130p
130p
11 Oct 2004
30 June 2005
30 June 2006
30 June 2007
10 Oct 2014
10 Oct 2014
25 Oct 2014
25 Oct 2014
50,000
85.5p
2 Oct 2009
1 Oct 2016
140,000
140,000
130p
130p
30 June 2005
30 June 2006
25 Oct 2014
25 Oct 2014
The vesting and exercise of these other options is generally subject
to the relevant option holder continuing to be an employee or
director of a company in the same Group as the Company at the
relevant time. There are no further performance criteria.
Synairgen Qualifying Non-Employee Option Scheme
Date of grant
Iain Buchanan
28 June 2010
Paul Clegg
7 September 2009
At 1 January and
31 December
2013
Exercise
price
Earliest
exercise
date
Expiry
date
212,765
23.5p
28 Jun 2013
27 Jun 2020
250,000
20p
7 Sept 2012
6 Sept 2019
The exercise of the options awarded in September 2009 (which
vested in 2012) and in June 2010 (which vested in 2013) is subject
to the rules of the scheme.
There were no other options granted to directors or which were
exercised or lapsed during the year.
The mid-market price of the Company’s shares at 31 December
2013 was 54.5p. During the year then ended, the mid-market price
ranged from 33.75p to 55.5p. On 19 March 2014 the closing price
was 55.5p.
Audited information
The following section (Directors’ remuneration) contains the
disclosures required by Schedule 5 to the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations
2008, forms part of the financial statements for the year ended 31
December 2013 and has been audited by the Company’s auditor,
BDO LLP.
Directors’ remuneration
The aggregate remuneration received by directors who served during the years ended 31 December 2013 and 2012 was as follows:
£’000
Note
Salary/fee
Benefits
Year ended 31 December 2013
Total (incl.
pension)
Pension
Total (excl.
pension)
Year ended 31 December 2012
Total (incl.
pension)
Pension
Total (excl.
pension)
Executive Directors
Richard Marsden
Dr Phillip Monk
John Ward
Non-executive Directors
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate
Total
(i)
(ii)
(iii)
(iv)
130
97
118
30
25
15
30
15
460
2
–
2
–
–
–
–
–
4
132
97
120
30
25
15
30
15
12
9
11
–
–
–
–
–
144
106
131
30
25
15
30
15
464
32
496
174
106
159
30
25
15
30
15
554
12
31
11
–
–
–
–
–
54
186
137
170
30
25
15
30
15
608
(i) Richard Marsden was the highest paid director during the years ended 31 December 2013
and 2012 and he did not exercise any share options during either year.
(iv) In addition to this fee for his services as a director, Prof. Holgate received consultancy fees
amounting to £4,000 (2012: £11,000) as disclosed in note 19 to the financial statements.
(ii) Dr Phillip Monk requested that £22,500 of his bonus entitlement for the year ended 31
December 2012 be paid in the form of an additional employer pension contribution.
(iii) £15,000 was paid to IP2IPO Limited for the services of Dr Bruce Campbell.
(v) The total amount paid to third parties amounted to £15,000 (2012: £15,000).
19 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
In addition to the amounts shown above, the share-based
payment charge for the period was:
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Paul Clegg
2013
£000
58
43
53
2
–
2012
£000
54
40
49
4
2
Total share-based payment in respect of key management
personnel amounted to £154,000 for the year ended 31 December
2013 (2012: £143,000).
By order of the Board
Paul Clegg
Chairman of the Remuneration and Nomination Committee
19 March 2014
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 20
Statement of Directors’ responsibilities in respect
of the Annual Report and the Financial Statements
The directors are responsible for preparing the strategic report,
the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements
for each financial period. Under that law the directors have elected
to prepare the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted
by the European Union and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law). Under company law the directors must not approve the
financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group for that period. The directors are
also required to prepare financial statements in accordance with
the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and
financial statements are made available on a website. Financial
statements are published on the Group's website in accordance
with AIM rules for companies and legislation in the United
Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Group's website is the responsibility
of the directors. The directors' responsibility also extends to the
ongoing integrity of the financial statements contained therein.
Going concern
The directors have prepared and reviewed financial forecasts. After
due consideration of these forecasts and current cash resources, the
directors consider that the Company and the Group have 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.
By order of the Board
John Ward
Company Secretary
19 March 2014
21 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Independent Auditor’s Report
to the members of Synairgen plc
We have audited the financial statements of Synairgen plc for the
year ended 31 December 2013 which comprise 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, the Parent
Company Balance Sheet and the related notes. The financial
reporting framework that has been applied in the preparation of
the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. The financial reporting framework that has been applied
in preparation of the parent company financial statements is
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s members
as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of directors’ responsibilities,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the FRC’s website at www.frc.org.uk/
auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of
the group’s and the parent company’s affairs as at 31 December
2013 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company’s financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and
the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where
the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Paul Anthony (senior statutory auditor)
For and on behalf of
BDO LLP, statutory auditor
Southampton
United Kingdom
19 March 2014
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 22
Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2013
Research and development expenditure
Other administrative expenses
Total administrative expenses
Loss from operations
Finance income
Loss before tax
Tax
Loss and total comprehensive income for the period
attributable to equity holders of the parent
Loss per ordinary share
Basic and diluted loss per share (pence)
Year ended
31 December 2013
£000
Year ended
31 December 2012
£000
Notes
(1,292)
(986)
(2,278)
(2,278)
11
(2,267)
224
(2,043)
(1,508)
(982)
(2,490)
(2,490)
27
(2,463)
213
(2,250)
(2.72)p
(3.12)p
4
6
7
8
Consolidated Statement of Changes in Equity
for the year ended 31 December 2013
Note
At 1 January 2012
Issuance of ordinary shares
Transaction costs in respect of share issues
Recognition of share-based payments
Total comprehensive income for the year
At 31 December 2012
Issuance of ordinary shares
Recognition of share-based payments
Total comprehensive income for the year
At 31 December 2013
Share
capital
£000
18a
696
56
–
–
–
752
–
–
–
Share
premium
£000
18b
17,128
2,445
(151)
–
–
19,422
–
–
–
Merger
reserve
£000
18c
Retained
deficit
£000
18d
483
–
–
–
–
483
–
–
–
(15,184)
–
–
193
(2,250)
(17,241)
–
206
(2,043)
752
19,422
483
(19,078)
Total
£000
3,123
2,501
(151)
193
(2,250)
3,416
–
206
(2,043)
1,579
23 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Consolidated Statement of Financial Position
as at 31 December 2013
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Current tax receivable
Trade and other receivables
Other financial assets – bank deposits
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total net assets
Equity
Capital and reserves attributable to equity holders of the parent
Share capital
Share premium
Merger reserve
Retained deficit
Total equity
Notes
31 December 2013
£000
31 December 2012
£000
9
10
11
12
13
14
15
17
17
18
18
297
15
312
199
190
43
458
834
1,724
2,036
(457)
(457)
1,579
752
19,422
483
(19,078)
1,579
332
27
359
72
210
79
1,431
1,656
3,448
3,807
(391)
(391)
3,416
752
19,422
483
(17,241)
3,416
The financial statements on pages 23 to 36 were approved and authorised for issue by the Board of directors on 19 March 2014 and signed on its
behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 24
Consolidated Statement of Cash Flows
for the year ended 31 December 2013
Year ended
31 December 2013
£000
Year ended
31 December 2012
£000
(2,267)
(2,463)
(11)
15
47
4
206
(2,006)
(127)
32
66
(2,035)
244
(1,791)
15
(3)
(16)
973
969
–
–
–
(822)
1,656
834
(27)
30
46
5
193
(2,216)
13
30
(572)
(2,745)
254
(2,491)
30
(9)
(144)
1,024
901
2,501
(151)
2,350
760
896
1,656
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance income
Depreciation
Amortisation
Loss on derecognised intangible asset
Share-based payment charge
Cash flows from operations before changes in working capital
(Increase)/Decrease in inventories
Decrease in trade and other receivables
Increase/(Decrease) in trade and other payables
Cash used in operations
Tax credit received
Net cash used in operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Purchase of intangible assets
Decrease in other financial assets
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Transaction costs in respect of share issues
Net cash generated from financing activities
(Decrease)/Increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
25 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013
1. Accounting policies
Basis of preparation
The Group financial statements have been prepared in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively ‘IFRSs’) as adopted by the European Union (‘Adopted IFRSs’) and with those parts
of the Companies Act 2006 applicable to companies preparing their financial statements under IFRSs.
Changes in accounting policy
The accounting policies adopted are consistent with those of the previous financial year. The following new standards have been adopted and
are effective for the current year:
IFRS 1 (revised)
Repeat Application, Borrowing costs
IFRS 7 (revised)
Enhancing disclosures about offsetting of financial assets and financial liabilities
IFRS 10
Consolidated Financial Statements
IFRS 10 (revised)
Transitional guidance
IFRS 11
Joint Arrangements
IFRS 11 (revised)
Transitional guidance
IFRS 12
Disclosure of Interests in Other Entities
IFRS 12 (revised)
Transitional guidance
IFRS 13
Fair Value Measurement
IAS 1 (revised)
Revised the method how other comprehensive income is presented and comparative information
IAS 19 (revised)
Post Employment Benefits and Termination Benefits projects
IAS 28
Investments in Associates
IAS 32 (revised)
Tax effect of equity distributions
IAS 34 (revised)
Interim reporting of segment assets
The adoption of these pronouncements has not impacted the classification or measurement of the Group’s assets and liabilities, nor has it
resulted in any additional disclosure.
New standards and interpretations not applied
IASB and IFRIC have issued the following relevant standards and interpretations with an effective date after the date of these financial statements:
Standard or
interpretation Title
IFRS 2
IFRS 3
IFRS 3
IFRS 9
IFRS 9
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle (definition of vesting condition)
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle (contingent consideration)
Amendments for Annual Improvements to IFRSs 2011-2013 Cycle (scope exception for joint ventures)
Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures
1 January 2015
Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) issues,
implementing additional disclosures (and consequential amendments) resulting from the introduction
of the hedge accounting chapter in IFRS 9
Applies when IFRS 9 is applied
IFRS 9
Classification and measurement of financial assets
Effective date to be confirmed
IFRS 10
Amendments for Investment Entities
IFRS 12
Amendments for Investment Entities
1 January 2014
1 January 2014
IFRS 13
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle (short-term receivables and payables)
Basis conclusion only
IFRS 13
Amendments for Annual Improvements to IFRSs 2011-2013 Cycle (scope of portfolio exception in paragraph 52)
1 July 2014
IAS 1
IAS 16
IAS 24
IAS 27
IAS 36
IAS 38
IFRS 14
IFRS 14 Regulatory Deferral Accounts issued
Amendments for Annual Improvements 2009-2011 Cycle (comparative information)
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle
(proportionate restatement of accumulated depreciation under the revaluation method)
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle (entities providing key management personnel services) 1 July 2014
Amendments for Investment Entities
Amendments for Recoverable Amount Disclosures for Non-Financial Assets
Amendments for Annual Improvements to IFRSs 2010-2012 Cycle
(proportionate restatement of accumulated depreciation under the revaluation method)
IAS 40
Amendments for Annual Improvements to IFRSs 2011-2013 Cycle (interrelationship between IFRS 3 and IAS 40)
Effective from
1 July 2014
1 July 2014
1 July 2014
1 January 2016
1 July 2013
1 July 2014
1 January 2014
1 January 2014
1 July 2014
1 July 2014
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 26
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
1. Accounting policies (continued)
The Directors do not anticipate that the adoption of the remaining standards and interpretations will have a material impact on the Group’s
financial statements in the period of initial application.
The effective dates stated here are those given in the original IASB/IFRIC standards and interpretations. As the Group prepares its financial
statements in accordance with IFRS as adopted by the European Union, the application of new standards and interpretations will be subject to their
having been endorsed for use in the EU via the EU Endorsement mechanism. In the majority of cases this will result in an effective date consistent
with that given in the original standard or interpretation but the need for endorsement restricts the Group’s discretion to early adopt standards.
The Group financial statements are presented in Sterling.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
made up to the reporting date. Control is achieved where the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on
consolidation. Business combinations that took place prior to 1 July 2006, the date of transition to IFRS, have not been restated as permitted
by IFRS 1 “First-time Adoption of International Financial Reporting”. The consolidated financial statements have been prepared using the
merger method of accounting.
Research and development
All ongoing research expenditure is currently expensed in the period in which it is incurred. Due to the regulatory and other uncertainties
inherent in the development of the Group’s products, the criteria for development costs to be recognised as an asset, as set out in IAS 38
“Intangible Assets”, are not met until a product has been submitted for regulatory approval and it is probable that future economic benefit
will flow to the Group. The Group currently has no such qualifying expenditure.
Employee benefits
All employee benefit costs, notably salaries, holiday pay, bonuses and contributions to Group stakeholder or personal defined contribution
pension schemes are charged to the consolidated statement of comprehensive income on an accruals basis.
Share-based payments
Option awards and awards made under the Group’s Long-Term Incentive Plan (‘LTIP’) granted after 7 November 2002 which had not vested
by 1 July 2006 are fair valued and charged to the consolidated statement of comprehensive income over the period from grant to vesting. The
Group has fair-valued option and LTIP awards using appropriate share valuation models. Options granted to non-employees are measured
at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured
at the fair value of the equity instrument granted. At each reporting date, the Group revises its estimate of the number of options that are
expected to become exercisable. The credit for any charge is taken to equity.
Intangible assets
Intangible assets are stated at cost less any accumulated amortisation and any accumulated impairment losses. Patent and licence costs
are amortised over ten years on a straight-line basis and the amortisation cost is charged to research and development expenditure in the
consolidated statement of comprehensive income.
Property, plant and equipment
Property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is
provided on a straight-line basis at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value over
their expected useful lives, which are as follows:
Computer equipment:
Laboratory and clinical equipment:
The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the
carrying value may not be recoverable.
3 years
5 years
Inventories
Inventories are stated at the lower of cost and net realisable value.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s consolidated statement of financial position when the Group becomes
a party to the contractual provisions of the instrument.
27 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
1. Accounting policies (continued)
Financial assets
The Group classifies its financial assets as loans and receivables. These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty
or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable; the amount of
such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the
impaired receivable.
The Group’s loans and receivables comprise trade and other receivables, other financial assets and cash and cash equivalents in the
consolidated statement of financial position. Other financial assets comprise short-term deposits not meeting the IAS 7 definition of a cash
equivalent. Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term bank deposits with a
maturity period of three months or less from the date of initial deposit.
Financial liabilities
The Group classifies its financial liabilities as financial liabilities held at amortised cost. Trade payables and obligations under finance leases
are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ‘operating lease’), the total rentals
payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term.
Taxation
Income tax is recognised or provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or
substantively enacted at the reporting date. Research and development tax credits are included as an income tax credit under current assets.
Deferred tax balances are recognised in respect of all temporary differences that have originated but not reversed by the reporting date except for
differences arising on:
• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference
could not reverse in the foreseeable future; and
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither
accounting or taxable profit.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are
expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Recognition of deferred tax assets is restricted to those instances where it is probable that a taxable profit will be available against which the
temporary difference can be utilised. Deferred tax balances are not discounted.
Foreign currencies
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate
(their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities
are recognised immediately in the consolidated statement of comprehensive income.
The functional currency of all entities in the Group is Sterling.
2. Critical accounting estimates and judgements
Critical accounting estimates, assumptions and judgements are continually evaluated by management based on available information and
experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates.
Share-based payment
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option and LTIP awards are disclosed in note 17.
3. Segmental analysis
The Group operates in one area of activity, namely drug discovery and development. All assets of the Group are located within the
United Kingdom and all losses were generated in that territory.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 28
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
4. Loss from operations
The loss from operations has been arrived at after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on derecognised intangible asset
Research and development expenditure
Operating lease rentals payable
Land and buildings
Other operating lease rentals
The fees of the Group’s auditor, BDO LLP, for services provided are analysed below:
Fees payable to the Company’s auditor for the audit of the Company’s financial statements
Fees payable to the Company’s auditor for other services:
The audit of the Company’s subsidiary, pursuant to legislation
Audit-related assurance services
Tax compliance services
Tax advisory services
Total fees
5. Employee benefit expense
The average monthly number of employees (including executive directors) was:
Research
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Total cash-settled remuneration
Accrued holiday pay
Share-based payment
Total remuneration
2013
£000
15
47
4
1,292
81
93
2013
£000
10
10
5
6
7
38
2013
13
3
16
2013
£000
727
83
51
861
3
204
1,068
2012
£000
30
46
5
1,508
79
93
2012
£000
10
10
5
5
3
33
2012
15
3
18
2012
£000
874
104
72
1,050
(2)
182
1,230
For the purpose of presentation in the Consolidated Statement of Comprehensive Income, remuneration costs of £624,000 (2012: £705,000) are
included in research and development expenditure and £444,000 (2012: £525,000) are included in other administrative expenses.
Key management compensation
The directors represent the key management personnel and details of their remuneration are given in the Directors’ Remuneration Report.
In respect of directors’ remuneration, the disclosures required by Schedule 5 to the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 are included in the detailed disclosures in the audited section of the Remuneration Report on pages 19 and 20,
which are ascribed as forming part of these financial statements.
29 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
6. Finance income
For the years ended 31 December 2013 and 2012 Finance income represents bank interest receivable.
7. Taxation
Current tax
UK corporation tax credit on loss for the year
Adjustment in respect of prior years
Total income tax credit
2013
£000
(190)
(34)
(224)
The tax assessed on the loss on ordinary activities for the year is different to the standard rate of corporation tax in the UK of 23.25%
(2012: 24.5%). The differences are reconciled below:
Loss on ordinary activities before tax
Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK
Effects of:
Expenses not deductible for tax purposes
Enhanced research & development relief
Variable rates on tax losses surrendered for research & development tax credit
Movement in unrecognised losses and temporary differences
Overprovision in respect of previous years
Total tax credit for the current year
Deferred taxation
2013
£000
(2,267)
(527)
48
(235)
212
312
(34)
(224)
2012
£000
(210)
(3)
(213)
2012
£000
(2,463)
(603)
48
(231)
238
338
(3)
(213)
Changes in tax rates and factors affecting the future tax charge
Finance Act 2013 includes provision for the main rate of corporation tax to reduce from 23% to 21% on 1 April 2014, and to 20% on 1 April
2015. This will reduce the Company’s future tax charge accordingly. The rate changes were substantially enacted on 17 July 2013. Accordingly,
deferred tax balances have been recognised at 20%, being the rate of corporation tax expected to be in force at the time these timing
differences are expected to reverse.
Recognised deferred taxation
Accelerated capital allowances
Other temporary differences
Charge for the year
2013
£000
1
(1)
–
2012
£000
4
(4)
–
Unrecognised deferred taxation
At 31 December 2013 the Group has trading losses carried forward which are available for offset against future profits of the Group amounting
to £10,676,000 (2012: £9,624,000) and non-trading losses of £1,084,000 (2012: £861,000). At 31 December 2013 the Group has an unrecognised
deferred tax asset in respect of these losses of £2,352,000 (2012: £2,412,000). The full utilisation of these losses in the foreseeable future is
uncertain and no deferred tax asset has therefore been recognised.
In addition to the deferred tax asset on losses, the Group has a potential future tax deduction on share options of £2,774,000 (2012: £1,861,000)
and a deferred tax asset of £555,000 (2012: £428,000) thereon. The additional tax deduction will crystallise at the point the options are exercised.
As the utilisation of this additional deduction against taxable profits in the Group is uncertain, no deferred tax asset has been recognised in
respect of the future tax deduction on share options.
The movement on the unrecognised deferred tax asset comprises the following:
Unrecognised deferred tax asset at the start of the year
Movement in year
Unrecognised deferred tax asset at the year-end
2013
£000
(2,840)
(67)
(2,907)
2012
£000
(2,265)
(575)
(2,840)
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 30
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
8. Loss per ordinary share
Loss attributable to equity holders of the Company (£000)
Weighted average number of ordinary shares in issue
2013
£000
(2,043)
2012
£000
(2,250)
75,186,742
72,036,917
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 earnings per share. This is because the exercise of share options would have the
effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33. At 31 December 2013, there were 7,393,272
options outstanding (2012: 7,511,635 options outstanding) as detailed in note 17.
9. Intangible assets
Cost
At 1 January 2012
Additions
Derecognised assets
At 31 December 2012
Additions
Derecognised assets
At 31 December 2013
Amortisation
At 1 January 2012
Derecognised assets
Charge for the year
At 31 December 2012
Derecognised assets
Charge for the year
At 31 December 2013
Net book amount
At 31 December 2013
At 31 December 2012
At 1 January 2012
Patent and licence costs
£000
345
144
(5)
484
16
(23)
477
106
–
46
152
(19)
47
180
297
332
239
At 31 December 2013 £297,000 (2012: £332,000) of the net book amount relates to interferon beta and lambda patent and licence costs, which has
a remaining average amortisation period of 6 years (2012: 7 years).
31 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
10. Property, plant and equipment
Computer
equipment
£000
Laboratory and
clinical equipment
£000
Cost
At 1 January 2012
Additions
Derecognised assets
At 31 December 2012
Additions
At 31 December 2013
Depreciation
At 1 January 2012
Derecognised assets
Charge for the year
At 31 December 2012
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
At 1 January 2012
At 31 December 2013 the Group had no capital commitments (2012: nil).
11. Inventories
Raw materials
Raw materials comprise the Group’s stock of interferon beta and its Biobank.
12. Trade and other receivables
Amounts receivable within one year:
Other tax and social security
Prepayments and accrued income
13. Other financial assets – bank deposits
Amounts receivable within one year:
Sterling fixed rate deposits of greater than three months’ maturity at inception
83
9
(50)
42
2
44
74
(50)
6
30
6
36
8
12
9
173
–
(41)
132
1
133
134
(41)
24
117
9
126
7
15
39
2013
£000
199
2013
£000
6
37
43
2013
£000
458
Total
£000
256
9
(91)
174
3
177
208
(91)
30
147
15
162
15
27
48
2012
£000
72
2012
£000
22
57
79
2012
£000
1,431
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 32
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
14. Cash and cash equivalents
Cash available on demand
15. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses and deferred income
16. Financial instruments
2013
£000
834
2013
£000
20
25
412
457
An explanation of the Group’s objectives, policies and strategies for financial instruments and analysis of the capital structure and capital
funding of the Group can be found on page 5 in the Financial Review.
Financial assets
Loans and receivables
Trade and other receivables
Other financial assets (less than one year)
Cash and cash equivalents (less than one year)
Total
Financial liabilities
Other financial liabilities
Notes
(i)
Book
value
£000
6
458
834
2013
Fair
value
£000
6
458
834
1,298
1,298
Book
value
£000
29
1,431
1,656
3,116
2012
£000
1,656
2012
£000
97
30
264
391
2012
Fair
value
£000
29
1,431
1,656
3,116
Trade and other payables (less than one year)
(ii)
417
417
361
361
(i) Trade and other receivables shown above excludes prepayments, which are not a contractual obligation to receive cash, amounting to £37,000 (2012: £50,000).
(ii) Trade and other payables shown above excludes amounts due in respect of social security and other taxes and deferred income, which are not a contractual obligation to pay cash, amounting
to £40,000 (2012: £30,000).
The objective of holding financial instruments is to have access to finance for the Group’s operations and to manage related risks. The main risks
arising from holding these instruments are interest rate risk, liquidity risk, and credit risk.
33 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
16. Financial instruments (continued)
Interest rate risk
Interest rate risk profile of financial assets, excluding short-term debtors:
Euro
Sterling
Total
2013
Floating-rate financial
assets
£000
2012
Floating-rate financial
assets
£000
–
1,292
1,292
83
3,004
3,087
Floating-rate financial assets comprise cash on deposit and cash at bank. There is no difference between the carrying amount and the fair
value of the financial assets.
Short-term deposits are placed with banks for periods of up to twelve months and are categorised as floating-rate financial assets. Contracts
in place at 31 December 2013 had a weighted average period to maturity of 31 days and a weighted average annualised rate of interest of 0.52%
(2012: 48 days, 1.09%).
Sensitivity analysis
It is estimated that a decrease of quarter of one percentage point in interest rates would have increased the Group’s loss before taxation by
approximately £5,000 (2012: £8,000).
Liquidity risk
The Group’s policy is to maintain adequate cash resources to meet liabilities as they fall due. All Group payable balances as at 31 December 2013
and 31 December 2012 fall due for payment within one year. Cash balances are placed on deposit for varying periods with reputable banking
institutions to ensure there is limited risk of capital loss. The Group does not maintain an overdraft facility.
Credit risk
The Group’s credit risk is attributable to its banking deposits. The Group places its deposits with reputable financial institutions to minimise
credit risk.
17. Share capital and premium
At 1 January 2012
Issuance of ordinary shares
Costs of issuance of shares
At 31 December 2012
Issuance of ordinary shares
At 31 December 2013
Note
Number
of shares
69,560,064
(i), (ii)
5,624,272
–
75,184,336
(iii)
11,555
75,195,891
Ordinary shares
of 1p each
£000
696
56
–
752
–
752
Share
premium
£000
17,128
2,445
(151)
19,422
–
Total
£000
17,824
2,501
(151)
20,174
–
19,422
20,174
(i) 5,555,556 ordinary shares of 1p were issued on 23 July 2012 at a premium of 44p per share to finance the Company’s ongoing interferon beta programme and to provide working capital for
the Company. Funds raised net of expenses amounted to £2,349,000.
(ii) 68,716 ordinary shares of 1p were issued on 28 September 2012 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
(iii) 11,555 ordinary shares of 1p were issued on 17 October 2013 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
The total authorised number of ordinary shares is 125 million shares (2012: 125 million shares) with a par value of 1p per share
(2012: 1p per share). All issued shares are fully paid.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 34
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
17. Share capital and premium (continued)
Options
At 31 December 2013 there were options outstanding over 7,393,272 un-issued ordinary shares, equivalent to 9.8% of the issued share capital,
as follows:
Date of grant
Number of shares
Exercise price
Earliest exercise date
Latest exercise date
Approved EMI scheme
26 October 2004
26 October 2004
26 October 2004
12 May 2005
2 October 2006
29 October 2007
Unapproved schemes
11 October 2004
11 October 2004
26 October 2004
26 October 2004
26 October 2004
7 September 2009 (LTIP)
7 September 2009 (QNEOS)
16 October 2009 (QNEOS)
28 June 2010 (QNEOS)
8 September 2010 (LTIP)
21 September 2011 (LTIP)
11 March 2013 (LTIP)
64,515
64,515
42,000
14,000
109,023
17,792
280,000
140,000
75,485
215,485
140,000
1,855,431
250,000
250,000
212,765
877,797
1,896,384
888,080
7,393,272
130p
130p
130p
136.5p
85.5p
61.5p
10p
10p
130p
130p
130p
1p
20p
20p
23.5p
1p
1p
1p
30 June 2005
30 June 2006
26 October 2007
12 May 2008
2 October 2009
29 October 2010
11 October 2004
30 June 2005
30 June 2005
30 June 2006
30 June 2007
25 October 2014
25 October 2014
25 October 2014
11 May 2015
1 October 2016
28 October 2017
10 October 2014
10 October 2014
25 October 2014
25 October 2014
25 October 2014
7 September 2012
6 September 2019
7 September 2012
6 September 2019
16 October 2012
15 October 2019
28 June 2013
27 June 2020
8 September 2013
7 September 2020
21 September 2014
20 September 2021
11 March 2016
10 March 2023
The Group has no legal or constructive obligation to repurchase or settle the options in cash. The movement in the number of share options is set
out below:
Outstanding at start of year
Granted during the year
Exercised during the year
Lapsed during the year
Number of outstanding options at year-end
Number
7,511,635
906,343
(11,555)
(1,013,151)
7,393,272
2013
Weighted average
exercise price
15.6p
1.0p
1.0p
2.6p
15.6p
2012
Weighted average
exercise price
15.2p
n/a
1.0p
9.6p
15.6p
Number
7,911,787
–
(68,716)
(331,436)
7,511,635
At 31 December 2013, 4,608,808 share options were capable of being exercised, with exercise prices ranging from 1p to 136.5p (2012: 3,540,438,
with exercise prices ranging from 1p to 136.5p). The options outstanding at 31 December 2013 had a weighted average remaining contractual life of
6.0 years (2012: 6.7 years). Vesting conditions are disclosed in the Directors’ Remuneration Report.
35 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013 (continued)
17. Share capital and premium (continued)
The Group uses a number of share-based incentive schemes as detailed above. The fair value per award granted and the assumptions used in the
calculations for the 6,553,272 options which had not vested at 30 June 2006 (being the date after which IFRS 2 has been applied) are as follows:
Date of grant
Type of award
Number of
shares
Exercise
price (p)
Share price at
date of grant (p)
Fair value per
option (p)
Award life
(years)
Risk
free rate
Expected
volatility rate
Performance
conditions
26 Oct 2004
Unapproved
140,000
26 Oct 2004
12 May 2005
2 Oct 2006
29 Oct 2007
7 Sept 2009
7 Sept 2009
16 Oct 2009
28 Jun 2010
8 Sept 2010
21 Sept 2011
11 Mar 2013
EMI
EMI
EMI
EMI
42,000
14,000
109,023
17,792
LTIP
1,855,431
QNEOS
QNEOS
QNEOS
LTIP
LTIP
LTIP
250,000
250,000
212,765
877,797
1,896,384
888,080
6,553,272
130p
130p
136.5p
85.5p
61.5p
1p
20p
20p
23.5p
1p
1p
1p
155p
155p
135.5p
85.5p
61.5p
18.5p
18.5p
20p
23.5p
24.25p
22.5p
53p
57.7p
57.7p
36.9p
24.4p
17.8p
7.1p
4.0p
6.3p
5.6p
12.1p
13.4p
30.9p
5
5
5
5
5
3
5
5
5
3
3
3
4.59%
4.59%
4.35%
4.75%
4.95%
2.09%
2.67%
2.65%
2.09%
0.92%
0.79%
0.36%
20%
20%
20%
20%
20%
30%
30%
None
None
None
None
None
Market
Market
30% Non-market
30%
40%
56%
44%
Market
Market
Market
Market
In accordance with IFRS 2, the Company has applied IFRS 2 to all share-based payments granted after 7 November 2002 which had not vested
by 1 July 2006. The following comments apply to those options which have been fair valued in accordance with IFRS 2.
(i) Stochastic valuation methodology was used for the LTIP awards and the QNEOS awards with market performance conditions and Black-Scholes methodology for the other awards.
(ii) Expected dividend yield is nil, consistent with the directors’ view that the Group’s model is to generate value through capital growth rather than payment of dividends.
(iii) The risk free rate is equal to the prevailing UK Gilts rate at grant date that most closely matches the expected term of the grant.
(iv) The fair value charge is spread evenly over the expected vesting period.
(v) The charge for the year ended 31 December 2013 for share-based payment amounted to £206,000 (2012: £193,000).
18. Capital and reserves
18a Share capital
Share capital represents the nominal value of shares issued.
18b Share premium
Share premium represents amounts subscribed for share capital in excess of nominal value less the related costs of share issues.
18c Merger reserve
The merger reserve represents the reserve arising on the acquisition of Synairgen Research Limited on 11 October 2004 via a share for share
exchange accounted for as a Group reconstruction using merger accounting under UK GAAP.
18d Retained deficit
The retained deficit represents cumulative net gains and losses recognised in the consolidated statement of comprehensive income, adjusted for
cumulative recognised share-based payments.
19. Related party transactions and balances
During the year ended 31 December 2013, the Group incurred consultancy fees with Prof. Stephen Holgate, a director of the Company, amounting to
£4,000 (2012: £11,000) in addition to his director’s remuneration disclosed on page 19. At the reporting date, the amount unpaid in respect of these
charges was £15,000 (2012: £11,000).
During the year ended 31 December 2013, the Group incurred no consultancy fees with Ms Emma Toman, partner of Richard Marsden, a director of
the Company (2012: £1,000). At the reporting date, there was no amount unpaid in respect of these charges (2012: £nil).
Details of key management personnel and their compensation are given in note 5 and on pages 19 and 20 of the Directors’ Remuneration Report.
20. Post balance sheet events
On 10 March 2014, the Company raised £1,500,000 (gross) for working capital purposes by issuing 3,125,000 1p ordinary shares at a price of
48p per share.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 36
Parent Company Balance Sheet
as at 31 December 2013
Company number: 5233429
Fixed assets
Investments
Current assets
Debtors
Investments: short-term deposits
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
Notes
31 December 2013
£000
31 December 2012
£000
5
6
7
8
8
9
9
19,557
17,761
4
458
789
1,251
(29)
1,222
20,779
752
19,422
605
20,779
9
1,431
1,632
3,072
(36)
3,036
20,797
752
19,422
623
20,797
The financial statements on pages 37 to 40 were approved and authorised for issue by the Board of directors on 19 March 2014 and signed on its
behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
37 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Parent Company Financial Statements
for the year ended 31 December 2013
1. Basis of preparation
Synairgen plc’s Parent Company balance sheet has been prepared under the historical cost convention and in accordance with UK Generally
Accepted Accounting Practice (‘UK GAAP’).
As permitted by FRS 1 “Cash Flow Statements”, no cash flow statement for the Company has been included on the grounds that the Group
includes the Company in its own published consolidated financial statements. The Company has taken advantage of the exemption in FRS 8
“Related Party Disclosures” not to disclose related party transactions with wholly-owned subsidiaries.
2. Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material to the Company’s
financial statements.
Investment in subsidiary undertakings
Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment. Control is
achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from
its activities.
Short-term deposits
Short-term deposits comprise deposits with UK banks for periods of up to twelve months. Short-term deposits are measured initially at cost
and subsequently at cost or recoverable amount if lower. Interest is accrued evenly on an accruals basis.
Share-based payments
In accordance with FRS 20, when the Company grants options over equity instruments directly to the employees of a subsidiary
undertaking, the effect of the share-based payment is capitalised as part of the investment in the subsidiary as a capital contribution,
with a corresponding increase in equity.
Taxation
The charge for taxation is based on the loss for the period and takes into account taxation deferred.
Current tax is measured at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the
balance sheet date, except that the recognition of deferred tax assets is limited to the extent that the Company anticipates making sufficient
taxable profits in the future to absorb the reversal of the underlying timing differences.
Deferred tax balances are not discounted.
3. Loss attributable to members of the Parent Company
As permitted by Section 408 of the Companies Act 2006, the Company’s profit and loss account has not been included in these financial
statements. The loss dealt with in the financial statements of the Parent Company for the year ended 31 December 2013 was £224,000
(2012: loss of £225,000).
4. Directors’ remuneration
The only employees of the Company are the executive directors and all their costs are borne by its subsidiary undertaking.
In respect of directors’ remuneration, the disclosures required by Schedule 5 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 are included in the detailed disclosures in the audited section of the Directors’ Remuneration
Report on pages 19 and 20, which are ascribed as forming part of these financial statements.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 38
Notes to the Parent Company Financial Statements
for the year ended 31 December 2013 (continued)
5. Investments
At 1 January 2013
Additions
At 31 December 2013
Investment in
subsidiary
undertaking
£000
140
–
140
Loan to
subsidiary
undertaking
£000
16,706
1,590
18,296
Capital
contribution
£000
915
206
1,121
Total
£000
17,761
1,796
19,557
At 31 December 2013, the Company has an investment in the following subsidiary undertaking:
Name of company
Synairgen Research Limited
Country of
incorporation
England
Proportion of voting rights
and ordinary share capital held
Nature of business
100% Drug discovery and development
6. Debtors
Other tax and social security
Prepayments and accrued income
All amounts fall due for payment within one year.
7. Creditors: amounts falling due within one year
Trade creditors
Accruals and deferred income
8. Share capital and share premium
At 1 January 2012
Issuance of ordinary shares
Costs of issuance of shares
At 31 December 2012
Issuance of ordinary shares
At 31 December 2013
Note
(i) (ii)
(iii)
Number
of shares
69,560,064
5,624,272
–
75,184,336
11,555
75,195,891
Ordinary shares
of 1p each
£000
696
56
–
752
–
752
2013
£000
2
2
4
2013
£000
5
24
29
Share
premium
£000
17,128
2,445
(151)
19,422
–
19,422
2012
£000
2
7
9
2012
£000
5
31
36
Total
£000
17,824
2,501
(151)
20,174
–
20,174
(i) 5,555,556 ordinary shares of 1p were issued on 23 July 2012 at a premium of 44p per share to finance the Company’s ongoing interferon beta programme and to provide working capital for
the Company. Funds raised net of expenses amounted to £2,349,000.
(ii) 68,716 ordinary shares of 1p were issued on 28 September 2012 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
(iii) 11,555 ordinary shares of 1p were issued on 17 October 2013 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
Details of the Company’s share option schemes and LTIP can be found in note 17 to the Group accounts on pages 35 and 36.
39 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
Notes to the Parent Company Financial Statements
for the year ended 31 December 2013 (continued)
9. Reconciliation of movements in reserves and shareholders’ funds
At 1 January 2012
Issuance of ordinary shares
Transaction costs in respect of share issues
Loss for the year
Share-based payment credit
At 31 December 2012
Loss for the year
Share-based payment credit
At 31 December 2013
10. Post balance sheet events
Share
capital
£000
696
56
–
–
–
752
–
–
752
Share premium
account
£000
Profit and loss
account
£000
Shareholders’
funds
£000
17,128
2,445
(151)
–
–
19,422
–
–
19,422
655
–
–
(225)
193
623
(224)
206
605
18,479
2,501
(151)
(225)
193
20,797
(224)
206
20,779
On 10 March 2014, the Company raised £1,500,000 (gross) for working capital purposes by issuing 3,125,000 1p ordinary shares at a price of
48p per share.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 40
Corporate
Directory
Company number
5233429
Directors
Executive: Richard Marsden,
Dr Phillip Monk, John Ward
Non-executive: Simon Shaw (Chairman),
Iain Buchanan, Dr Bruce Campbell,
Paul Clegg, Prof. Stephen Holgate
Secretary
John Ward
Head office and Registered office
Mailpoint 810, Level F, South Block,
Southampton General Hospital,
Tremona Road, Southampton SO16 6YD
Telephone and fax: +44 (0) 2380 512 800
Website
www.synairgen.com
E-mail
info@synairgen.com
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Registrars
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Northern House, Woodsome Park,
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Solicitors
Fasken Martineau LLP
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Glossary
Acute
An acute disease is a disease with a
rapid onset and/or a short course
Adenovirus
A virus that can cause respiratory
disease (eg. the common cold),
conjunctivitis and gastroenteritis
Airways (or bronchial tubes)
The tubes that carry air in and out
of the lungs
Allergen
A type of antigen that produces
an abnormally vigorous immune
response
Antibiotic
A drug that inhibits bacterial growth
or kills bacteria
Anti-viral
Any substance that can either destroy
viruses or suppress their growth
Apoptosis
A naturally occurring form of
programmed cell death
Assay
A laboratory test to determine
parameters such as the strength
of a solution, the proportion of a
compound in a mixture, the potency
of a drug or the purity of a preparation
Asthma
A disorder in which the airways
become episodically narrowed,
leading to wheeze, shortness of
breath, cough and chest tightness
Biobank
A collection of samples from
clinically-characterised volunteers
comprising blood, induced sputum,
bronchial biopsies and epithelial
cells. These samples are used to
develop the complex in vitro human
disease models
Biomarker
A biomarker is a biochemical feature
or facet that can be used to measure
the progress of disease or the effects
of treatment
Bioterrorism
Terrorism involving the intentional
release or dissemination of
biological agents
British Thoracic Society (BTS)
Step classification system
A stepwise treatment regime (from
steps 1 to 5, with 5 being the most
severe) for treating asthma in Britain
aiming to achieve optimum control
without excessive medication
Broad spectrum antibiotic
An antibiotic that acts against a wide
range of disease-causing bacteria
Bronchodilators
Medicines which relax the muscles
around the airways, helping the
airways to open up, so making it
easier to breathe. There are several
types of bronchodilators, of which
short-acting beta-agonist drugs are
the most commonly used
Bronchospasm
A sudden contraction of airway
smooth muscle resulting in a
narrowing of the airways
Chronic bronchitis
An inflammation of the airways
accompanied by coughing and
production of phlegm. The symptoms
are present for at least three months
in each of two consecutive years.
See COPD
Chronic disease
A persistent or long-lasting condition
Clinical Trial Authorisation or CTA
An authorisation from the MHRA to
conduct a clinical trial
Compliance
The level of adherence to a
recommended course of treatment
or prescribed regimen
41 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
COPD
Chronic obstructive pulmonary
disease covers two conditions:
chronic bronchitis and
emphysema. COPD usually
results from long-term exposure
to irritants to the lungs, of which
the most prevalent is tobacco
smoke. Unlike asthma, where
airflow obstruction varies, in
COPD airflow obstruction is
usually irreversible
Coronavirus
A virus that can cause respiratory
disease such as the common
cold or SARS (depending on
the type of coronavirus) and
gastroenteritis
DNA
Nucleic acid that carries genetic
information in the cell
Emphysema
A destructive process involving
the air spaces (alveoli) of the
lungs, which leads to over-
inflation of the lung and, when
sufficiently advanced, causes
breathlessness and lack of
oxygenation of blood. See COPD
Eosinophil
A type of white blood cell that
has a role in allergy and asthma
Epithelium
In the lung, the epithelium is a
thin layer of cells which lines
the airway tubes in order to
protect and regulate the tissue
underneath
Exacerbation
A rapid deterioration of a
chronic disease that makes
the symptoms worse
Gene
A hereditary unit consisting
of a sequence of DNA that
determines a particular
characteristic of a living
organism
IFN-β
Interferon beta is a natural protein
found in the body which helps
to regulate the immune system
and fight off viruses. IFN-β is
currently marketed by a number
of companies as an injectable
therapy for the treatment of
multiple sclerosis
IL-5
A protein that can activate
eosinophils
IL-13
A protein involved in allergic
inflammation
Influenza-like illness
Set of symptoms presenting
similar to those for influenza of
which influenza may or may not
be the cause
Influenza
A contagious viral infection of
the respiratory tract, leading to
fever, headaches, sore throat,
congestion of the nose and body
aches
In vitro
Carried out in the laboratory, e.g.
in a test tube or culture plate
In vitro model (complex)
A research model which contains
more than one cell type and
allows the study of interactions
between different cell types
and ‘test’ agents relevant to the
disease or a therapy
Long acting beta agonist
An asthma drug that acts to relax
(open) the airways for 12 or more
hours
Lower airway
The airway tubes in the lung
running from the throat down,
ending in the air spaces (alveoli)
where gas exchange occurs
Macrophages
Phagocytic (i.e. cells that can
engulf other cells and cell
components) white blood cells
involved in cellular clearance and
inflammation
MHRA
The Medicines and Healthcare
products Regulatory Agency;
a UK government body tasked
with ensuring that medicines
and medical devices work and
are safe
Morbidity
Incidence or prevalence
of a disease
Mucus
A gelatinous substance normally
produced by the airway cells to
protect and hydrate the airway
surface from harmful agents
Multiple sclerosis (MS)
A disease affecting nerves
in the brain and spinal cord,
causing problems with muscle
movement, balance and vision
Neuraminidase inhibitor
A class of drug used to treat
influenza by interfering with virus
release from the infected cell
by blocking neuraminidase (a
protein found on the virus cell
surface), of which Tamiflu® and
Relenza® are examples
Pandemic influenza
An influenza pandemic occurs
when a new influenza virus
appears against which the
human population has no
immunity, resulting in epidemics
worldwide with enormous
numbers of deaths and illness
(definition on world health
organization website)
Parainfluenza
A virus that can cause the
common cold. Parainfluenza
is also responsible for 75% of
croup cases in children
Patent Cooperation Treaty
or PCT
A system by which a patent
application can be filed in
many different countries at
once. A single international
application is filed initially at a
receiving office. After a search
and publication, the application
may be converted to a series
of national applications in
different countries
Pathway
A signalling pathway is a group
of molecules that work together
in a cell to control one or more
cell functions
Peak expiratory flow
A lung function test that
measures a person's ability to
breathe out air
Personalised/P4/stratified
medicine
The customisation of healthcare
to the individual patient
Phase I Clinical Trial
A study conducted in volunteers
to determine the biological
effects of a drug, especially
safety and tolerability
Phase II Clinical Trial
A study in patients with the
aim of making a preliminary
determination of the efficacy of a
drug to provide proof of concept
and/or to study drug dose
ranges
Phase IIa Clinical Trial
Used to describe a Phase II
clinical trial evaluating efficacy,
adverse effects and safety risks
Phase IIb Clinical Trial
Used to describe a subsequent
Phase II clinical trial that also
evaluates dosage tolerance and
optimal dosage frequency in a
larger number of patients than
enrolled in a Phase IIa trial
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2013 | 42
Translational medicine
The process of converting
a scientific discovery into
something that aims to improve
the health of individuals and
the community
Type I IFNs
A classification of interferon that
includes IFN-β
Virion
A virus particle which has the
ability to infect cells, consisting
of an outer protein shell called
a capsid and an inner core of
nucleic acid
Virus
A virus is a non-living small
particle that infects cells in
biological organisms. Viruses
can reproduce only by invading
and controlling other cells as they
lack the cellular machinery for
self-reproduction
Wheeze
A whistling sound made by
a person who has airflow
obstruction when breathing
Phase III Clinical Trial
A full scale clinical trial to
determine drug efficacy
and safety prior to seeking
marketing approval
RNA
Nucleic acid that is involved
in protein synthesis and
transmission of genetic
information
Phlegm
See Sputum
Placebo
An inactive substance or
preparation used as a control/
comparator (in a clinical trial
for example) to determine the
effectiveness of a medicinal drug
Primary endpoint
The most important measure
(endpoint) assessed in a clinical
trial
Prognostic biomarker
A biomarker that can predict
the future course of a disease or
response to a therapy
Prophylaxis
A measure taken for the
prevention of a disease or
condition
Protein
Large molecules made of smaller
biological units known as ‘amino
acids’. Proteins are responsible
for the majority of the function
and much of the structure of
living things, including humans
Pulmonary
Relating to, functioning like,
or associated with the lungs
Rhinovirus
Rhinoviruses are the most
common viral infective agents in
humans. The most well known
disease caused by rhinoviruses
is the common cold
RSV
Respiratory syncytial virus (RSV)
can cause both mild respiratory
illness (e.g. the common cold)
and serious respiratory tract
infections (such as bronchiolitis
and pneumonia). More severe
infections can occur in the very
young, the very old and those
with weakened immune systems
Safety study
See Phase I Clinical Trial
Seasonal Influenza
Seasonal flu is a yearly outbreak
of flu infection, caused by
a flu virus. The seasonal flu
is somewhat different every
year, as flu viruses are always
changing
Secondary/exploratory
endpoint
The second most important (or
additional) measure (or endpoint)
assessed in a clinical trial
Severe asthma
Asthma which requires
treatment with high dose inhaled
corticosteroids plus a second
controller (and/or systemic
corticosteroids) to prevent it from
becoming ‘uncontrolled’ or which
remains ‘uncontrolled’ despite
this therapy
SG004
A double-blinded, placebo-
controlled, single and multiple
dose-escalating Phase I study
to assess the safety and
tolerability of inhaled IFN-β in
controlled asthmatic male and
female subjects
SG005
A randomised, double-blinded,
placebo-controlled Phase II
study, comparing the efficacy
and safety of inhaled IFN-β
to placebo administered to
asthmatic subjects after the
onset of a respiratory viral
infection for the prevention or
attenuation of asthma symptoms
caused by respiratory viruses
Sputum
The thick mucus which is
coughed up by a person.
Sputum contains cells and
soluble substances secreted
into the airways (bronchi), some
of which can mediate disease
if present in amounts different
to normal. Sputum is also
commonly called phlegm
Steroids
A group of chemicals that is
produced naturally in the body
by the adrenal gland. In asthma,
steroids are given by inhalation
or by mouth to reduce the
inflammation of the airways
Systemic absorption
The fraction of drug that reaches
the systemic circulation
Upper airway
The tubes in the nose and neck
which conduct air into the lung
Toll-like receptor agonists
Novel anti-viral drugs that
activate Toll-like receptors (TLRs).
TLRs regulate the immune
system in response to pathogens
43 | Synairgen plc annual report and accounts 2013 | www.synairgen.com | LSE:SNG
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