Annual Report
and Accounts
2016
a deeper
understanding
of respiratory
biology
Stock symbol: LSE:SNG
www.synairgen.com
Operational
highlights
Financial
highlights
• Positive in vitro results in March 2016
from collaboration with Pharmaxis to
develop the LOXL2 inhibitor as a
novel treatment for idiopathic
pulmonary fibrosis (IPF)
• AstraZeneca stopped the Phase IIa
trial of AZD9412, as colds were not
causing as many severe exacerbations
as expected in the trial population
potentially compromising the trial’s
ability to assess any effect of the
drug on this endpoint
• Loss from operations for the
year ended 31 December
2016 was £3.44 million
(2015: £2.61 million)
• Research and development
expenditure for the year
was £2.42 million
(2015: £1.36 million)
• Cash, cash equivalents and
deposit balances of £4.77
million at 31 December 2016
(2015: £7.71 million). The
Group remains debt free
Post period-end
highlights
• Further positive data in
March 2017 from two
preclinical models of
Synairgen’s LOXL2 inhibitor
programme against IPF
• AZD9412 INEXAS clinical
trial update, announcing
AstraZeneca’s decision to
return the rights of inhaled
interferon beta to Synairgen
Strategy
Synairgen leverages its deep understanding of
respiratory biology to discover and develop novel
therapies in the areas of highest unmet respiratory
medical need, including severe asthma, COPD and
IPF. Using our BioBank platform (our human tissue
models of respiratory disease), and our 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.
Contents
Introduction
Strategy
Highlights
Business Review
Strategic Report
Governance
Synairgen’s Founders
Directors
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
1
2
3
10
11
13
14
16
www.synairgen.com
19
20
Financials
Statement of Directors’ Responsibilities
Independent Auditor’s Report to the
members of Synairgen plc
Consolidated Statement of
21
Comprehensive Income
21
Consolidated Statement of Changes in Equity
22
Consolidated Statement of Financial Position
23
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements 24
35
Parent Company Balance Sheet
Parent Company Statement of Changes in Equity 35
Notes to the Parent Company
Financial Statements
36
Other
Corporate Directory
Glossary
39
39
The cover image is a cross section
showing organisation of the
collagen fibres in the in vitro
fibroblastic focus model of IPF.
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Strategic Report
The directors present their Strategic Report
for the year ended 31 December 2016.
Principal activities
Synairgen plc (the ‘Company’) is the holding company for
Synairgen Research Limited, a respiratory drug discovery
and development company.
Operating Review
Summary
During 2016 we made excellent progress in collaboration
with Pharmaxis to develop a LOXL2 inhibitor to treat
or prevent fibrosis and are on schedule to progress
a compound into the clinic in H2 2017. AstraZeneca
progressed the INEXAS trial of AZD9412 (inhaled interferon
beta or IFN-beta) through the midway point, but stopped
the trial early due to a lower than expected number
of exacerbation events across the trial population.
Post period-end, in April 2017, AstraZeneca decided
to return the interferon beta programme to Synairgen.
We are very encouraged to observe that in the INEXAS
trial inhaled IFN-beta once again ‘switched on’ antiviral
defences in the lung and improved lung function,
confirming our earlier clinical trial findings. Furthermore,
inhaled IFN-beta was well tolerated. All data are being
returned to Synairgen from AstraZeneca for further
scrutiny. Once an in-depth analysis of these data has been
concluded, we will determine the future development plan
for IFN-beta in respiratory indications and under Synairgen
control. Based on encouraging and recently published
and unpublished work (from emerging research at the
University of Southampton) the opportunity for further
clinical development for COPD patients will be actively
investigated.
LOXL2 inhibitor collaboration
In 2015 we signed a collaboration agreement with
Pharmaxis to co-develop their orally bioavailable LOXL2
inhibitors for the treatment and/or prevention of fibrosis.
Fibrosis or scarring is part of the normal wound-healing
process. However, when excessive fibrosis occurs in
an organ, the build-up of scar tissue can change its
structure and stop it from functioning properly and
cause disease. For example, in the fatal lung disease
idiopathic pulmonary fibrosis (IPF) the accumulation of
scar tissue affects the uptake of oxygen into the blood
and stiffens the lungs, making it harder to breathe. Scar
tissue is formed largely of collagen. LOXL2 is a member
of a family of enzymes that stiffen scar tissue by forming
cross-links between the collagen molecules. It is believed
that treatment with a LOXL2 inhibitor will reduce the
stiffness of fibrotic tissue and thus alter the course
of disease. Supporting this approach, levels of LOXL2
have been found to be elevated in fibrotic disease and
inhibition of LOXL2 has been shown to be protective
in preclinical models of fibrosis in different organs.
In the collaboration, Synairgen is investigating the effects
of the LOXL2 inhibitors for IPF, whilst in parallel, Pharmaxis
is generating data to support the rationale for using
these inhibitors in liver fibrosis (NASH), kidney fibrosis
and heart fibrosis. Individually these diseases represent
areas of high unmet medical need and consequently
significant market opportunities. Together they represent
a substantial opportunity for a novel approach, as
reflected in the number and commercial value of recent
licensing/acquisition transactions occurring in this area.
In vitro models, which use tissue from patients with IPF,
have been developed in collaboration with University of
Southampton scientists to test the LOXL2 inhibitors. During
the year we have shown that we can reduce collagen
cross-link formation in these models in a dose-dependent
manner. Post period-end, as announced in March 2017, we
have shown that this leads to a reduction in the stiffness
of the tissue. We subsequently went on to show that the
compounds reduced fibrosis and improved lung function
in an in vivo model of lung fibrosis run by McMaster
University, Canada. These data support the rationale
and the development of these particular compounds
for treatment of fibrotic disease. We are currently
progressing these compounds towards the clinic and,
subject to satisfactory completion of preclinical testing,
a Phase I clinical trial is scheduled to start in H2 2017.
We are very pleased with the progress that has been made
in this programme; this is an exciting area scientifically.
We are encouraged by the significant level of interest
in this programme from potential licensees, who will
be following the Phase I trial developments closely.
Inhaled interferon beta programme
The majority of asthma exacerbations are caused by
respiratory viruses (common cold viruses), and the
rationale to use inhaled interferon beta in asthma patients
came from an observation made at the University of
Southampton that levels of IFN-beta were lower in cell
cultures from asthmatic patients than non-asthmatics
during viral infection experiments. Furthermore, by
normalising the IFN-beta levels there was less cell death,
lower inflammatory markers, and lower virus levels;
IFN-beta was protective. We went on to show that the
drug was well tolerated in a Phase I trial and that antiviral
defences were ‘switched on’. In our SG005 Phase II trial
asthma patients were treated with inhaled IFN-beta at
the start of a suspected cold infection, and again we
demonstrated that the drug had ‘switched on’ antiviral
defences in the lungs. We also showed that inhaled
IFN-beta provided an overall improvement in morning
peak expiratory flow (an important measure of lung
function), and in a subgroup from the trial (the ‘difficult
to treat’ patients), who represented about 40% of the
trial population, inhaled IFN-beta prevented a worsening
of asthma control. Furthermore, patients on inhaled
IFN-beta used fewer puffs of their rescue medication,
reaching statistical significance on some days.
The findings by AstraZeneca in its Phase II INEXAS study
were unexpected and contrary to the literature reporting
a link between viruses and exacerbations of asthma.
We are however very encouraged to observe that the
lungs’ antiviral defences had been switched on – as
demonstrated by significant changes in an accepted
biomarker of the interferon pathway. Indeed this is the third
trial where this activation has been shown. Furthermore
on an objective measure we saw that treatment with
inhaled IFN-beta resulted in an improved morning peak
expiratory flow of 19.7L/min (p=0.01). The day-by-day
changes in this parameter closely mirror the changes
we observed in our Phase II study. Once again inhaled
IFN-beta was well tolerated. All data from the INEXAS
trial will be provided to Synairgen and we will study each
parameter in detail to guide future development.
We are particularly interested in using inhaled IFN-beta
in COPD. Two new publications1,2 in 2017 have shown
that cold viruses are highly likely to cause exacerbations
in COPD, which contrasts with the findings in asthma
from the INEXAS trial, where only around 10% of patients
exacerbated during cold infections. There is also a greater
clinical need in COPD compared to asthma as exacerbations
in COPD patients are linked to a rapid and permanent
deterioration of disease and death. New technology has
recently emerged which will enable us to confirm viral
infection prior to commencing treatment, making trial
management and interpretation easier. Thus the new data
linking viruses to exacerbations, a better understanding of
the underlying biology in COPD, the high clinical need, and
new diagnostic technology presents us with an attractive
opportunity to explore the drug’s full potential.
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
operating result of the Group. At 31 December 2016 cash
and deposit balances balances amounted to £4.77 million
(2015: £7.71 million) and were above budgeted levels. The
operating loss of £3.44 million (2015: loss of £2.61 million)
was also favourable to the budgeted result for the year.
References
1. Wilkinson TMA et al. A prospective, observational cohort study of the
seasonal dynamics of airway pathogens in the aetiology of exacerbations
in COPD. Thorax 2017; 0: 1-9
2. Johnston N et al. Colds as predictors of the onset and severity of COPD
exacerbations. International Journal of COPD 2017:12 839–848
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Novel LOXL2 inhibitors
have the potential to
improve lung function
in patients suffering
from lung fibrosis
In vitro LOXL2 inhibitor reduces tissue stiffness
Lung fibroblast biopsies from IPF patients are
cultured under optimised conditions to create
fibroblastic focus model
Plate
fibroblasts
obtained from
IPF patients
Replace
with media
appropriate
for generation
of mature
collagen
matrix
Add
pro-fibrotic
mediator
(TGF-β1),
which causes
cells to
contract into
a ball
Culture for 6
weeks. Then
analyse for
stiffness,
structure and
cross-links
Hypothesis: Reducing the stiffness of collagen
matrix breaks the cycle of fibrosis and promotes
the breakdown of the collagen matrix.
Increased tissue stiffness is both a consequence and a
driver of fibrosis of the lungs (scarring and thickening
of alveoli and lung tissue, limiting the amount of
oxygen that can pass into the blood vessels from
affected alveoli).
Synairgen and Pharmaxis have been collaborating
since August 2015 to develop novel mechanism-based
LOXL2-selective small molecular weight inhibitors for
the treatment of fibrotic diseases such as idiopathic
pulmonary fibrosis (IPF). Together, they have
successfully profiled novel, orally bioavailable,
LOXL2-selective small molecule inhibitors in
in vitro and in vivo models of lung fibrosis.
Treatment with LOXL2-selective inhibitors caused a
dose-dependent reduction in collagen cross-link
formation and matrix stiffness in an in vitro fibroblastic
focus model. A corresponding reduction in lung tissue
stiffness (elastance) and fibrosis score was shown in
an in vivo model of lung fibrosis. These data suggest
that inhibition of LOXL2 using these novel inhibitors
has the potential to improve lung function in patients
with lung fibrosis by reducing tissue stiffness.
In vivo LOXL2 inhibitor reduces fibrosis
and tissue stiffness
A LOXL2 inhibitor was profiled in a model of
progressive lung fibrosis initiated by local expression
of the pro-fibrotic mediator TGF-β in the lungs using
a non-replicating adenoviral vector, conducted at
McMaster University (Hamilton, Canada)
To look at tissue stiffness, samples from fibroblastic focus model
were measured by CellScale MicroSquisher to determine how much
force required to compress sample by 25%
LOXL2 inhibitor reduces fibrosis as measured by Ashcroft score
In vitro model replicates
featues of IPF lung tissue
Fibroblastic focus in tissue section
from IPF patient biopsy
In vitro fibroblastic focus model section
following TGF-β1 treatment
Results of MicroSquisher work show impact of
increasing doses of LOXL2 inhibitor
LOXL2 inhibitor reduces tissue stiffness
Before and after compression
Stiffness (IPF, n=3)
) 20
a
P
K
(
E
15
l
,
s
u
u
d
o
m
s
g
n
u
o
Y
’
10
5
0
**
*
Control
BAPN
0.01
0.1
*
1
**
10
Compound A (μM)
Sections stained Masson’s Trichrome stain:
Blue = Collagen, Red = Cytoplasm, Black = Nuclei
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Fibrosis Score*****Ashcroft Score6AdDL(Control– no fibrosis)AdTGF β1(full fibrosis)15mg/kgCompound B30mg/kg543210Elastance (Lung stiffness)***Est (cmH2O/mL)3AdDL(Control– no fibrosis)AdTGF β1(full fibrosis)15mg/kgCompound B30mg/kg210
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 21 to 34. The consolidated financial
statements are presented under International Financial
Reporting Standards as adopted by the European Union.
The financial statements of the Company, set out on
pages 35 to 38, are prepared in accordance with Financial
Reporting Standard 100 Application of Financial Reporting
Requirements and Financial Reporting Standard 101 Reduced
Disclosure Framework.
Statement of Comprehensive Income
The loss from operations for the year ended 31 December
2016 was £3.44 million (2015: loss £2.61 million). Research
and development expenditure for the year amounted
to £2.42 million (2015: £1.36 million), with the increase
in expenditure being attributable to the increased
expenditure on the LOXL2 programme. This programme
commenced in August 2015 and during 2016 as discussed
further above the major elements of expenditure have
been on chemistry, manufacturing, pharmacology and pre-
clinical studies.
Other administrative costs for the year amounted to
£1.02 million (2015: £1.28 million), with the reduction over
the prior year being attributable to lower staff costs (no
executive bonuses) and lower legal costs (2015 included costs
associated with the Pharmaxis transaction). The research
and development tax credit amounted to £0.59 million
(2015: £0.30 million), with the increase being attributable to
the higher expenditure on the LOXL2 programme. The loss
after tax for 2016 was £2.82 million (2015: loss of £2.26 million)
and the basic loss per share amounted to 3.08p (2015: basic
loss per share of 2.47p).
Statement of Financial Position and cash flows
At 31 December 2016, net assets amounted to £4.69 million
(2015: £7.35 million), including net funds, as detailed below
in Capital structure and funding, of £4.77 million (2015:
£7.71 million).
The principal elements of the £2.94 million decrease over
the year ended 31 December 2016 (2015: £1.89 million
decrease) in net funds were:
• Cash used in operations of £3.32 million
(2015: £1.99 million); and
• Research and development tax credits received of
£0.33 million (2015: £0.06 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 2016 amounted to £4.69 million
(2015: £7.35 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 2016
amounted to £4.77 million and comprised short-term
deposits (with original maturities of greater than three
months and less than one year) and cash and cash
equivalents, as shown below:
2016
£m
1.66
2015
£m
3.72
2014
£m
6.75
2013
£m
0.46
31 Dec
2012
£m
1.43
3.11
3.99
2.85
0.83
1.66
Short-term deposits
Cash and cash
equivalents
Net funds
4.77
7.71
9.60
1.29
3.09
The Group did not have any bank borrowings as at
31 December 2016 (2015: £nil).
There have been seven 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);
£2.35 million ( July 2012); £1.42 million (March 2014); and
£4.98 million ( July 2014). The other major sources of
funding received by the Group from the formation of the
business until 31 December 2016 have been: revenues
from licensing transactions of £4.25 million, research and
development tax credits of £3.05 million, bank interest
of £1.71 million, and revenues from collaborative work of
£0.67 million.
Treasury policy and financial risk management
• Failure to generate innovative discoveries
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 Australian dollar, Canadian dollar, Euro and US dollar
currency movement as the Pharmaxis collaboration
involves expenditure in all these currencies. The largest
exposure relates to the Australian dollar on account of
work undertaken by Pharmaxis and which is billed on a
quarterly basis. To hedge against currency movement the
Group purchases Australian dollars during the quarter
before the payment is due.
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 and LOXL2 programmes
The Group’s most advanced drug development programme
is the interferon beta programme. With AstraZeneca’s
strategic decision post year-end to return the programme,
the Group will complete an analysis of the INEXAS trial data
and determine the most appropriate development route
for the programme.
In 2015 the Group entered into the LOXL2 collaboration
agreement with Pharmaxis Ltd.
The Group continues to review a number of additional
development opportunities which it hopes will enable it to
broaden and diversify its portfolio further.
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 many 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.
• Pre-clinical development, clinical development,
and regulatory risk
The development of pharmaceutical drugs requires that,
upon satisfactory completion of pre-clinical work, 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 seeking advice
from toxicology experts, closely monitoring the progress
of recruitment on clinical trials, drawing on the experience
of its Founders, seeking advice from regulatory advisers,
holding consultations with the appropriate regulatory
bodies, and consulting with its collaboration partners.
• 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.
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Strategic Report
(continued)
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.
• Brexit
Following the referendum vote in June 2016 the UK
government started the withdrawal process from the
European Union in March 2017, putting the UK on course
to leave by April 2019.
At this stage it is unclear as to what the long term impact
will be. In the short term Sterling has weakened against
major currencies and this has impacted on the cost of the
Pharmaxis collaboration.
Outlook
In summary we remain on track to advance a Pharmaxis
compound into Phase I in H2 2017 and there is encouraging
business development interest in similar anti-fibrotic assets.
Building on the positive outcomes in the INEXAS trial, we will
continue to analyse the full data set as it becomes available,
alongside further published and unpublished work in COPD,
to establish the best route forward for this programme.
By order of the Board
John Ward
Company Secretary
16 May 2017
Synairgen’s
Founders
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
Prof. Ratko Djukanovic
is Professor of Medicine
at the University of
Southampton
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Directors
Simon Shaw
Non-executive Chairman
Dr Phillip Monk
Chief Scientific Officer
Iain Buchanan
Non-executive Director
Dr Bruce Campbell
Non-executive Director
Bruce Campbell joined
Synairgen as a non-executive
Director in April 2006.
He has 45 years of drug
development experience
and has developed many
drugs in a wide range of
indications which are now
on the market. He currently
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,
a member of the European
ICH Safety Working Party
and a scientific advisor to
IP Group plc. He is a visiting
Professor in Pharmacology at
King’s College, London.
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.
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
tralokinumab, 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.
Iain Buchanan was appointed
as a non-executive director
in June 2010 and brings to
the company over 40 years
of management experience
in the pharmaceutical and
biotech industries. Most
recently he was CEO of
NOXXON Pharma AG based in
Berlin and previously he was
CEO of Novexel S.A. based
in Paris. He joined Novexel
from Vertex Pharmaceuticals
where he established the
European affiliate. Prior to
Vertex, Iain managed the
international licensee business
of Cilag AG - a subsidiary of
Johnson and Johnson - based
in Switzerland. Iain serves as
a member of the supervisory
board of NOXXON Pharma AG.
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
Paul Clegg
Non-executive Director
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.
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.
Paul Clegg was appointed
as a non-executive
director of Synairgen 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. After over
twenty years working in
the investment banking
industry, Paul joined Accsys
Technologies PLC, a UK
publicly quoted company
which has developed the
process and the commercial
industrialisation of wood
acetylation, as Chief
Executive Officer.
11 | Synairgen plc annual report and accounts 2016 | www.synairgen.com | LSE:SNG
Prof. Stephen Holgate CBE
Non-executive Director
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 1000 papers in peer-
reviewed literature. He is Member
of the Science Europe Medical
Science Committee and Horizon
2020 Health Science Panel; Board
Chair of the National Centre for
the Replacement, Refinement and
Reduction of Animals in Research
(NC3Rs); Chairman of Defra’s
Hazardous Substances Advisory
Committee; Trustee and Chair of
the Research Strategy Committee
of Cancer Research UK; Chair of
the research Committee of the
British Lung Foundation (and
Trustee); and a Trustee of The
Kennedy Trust for Rheumatology
Research. He serves on a number
of Advisory Committees in
industry including scientific board
member or advisor to a number
of companies, including Teva and
Novartis.
Simon Shaw
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate CBE
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2016 | 12
Directors’ Report
Corporate Governance
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 2016.
Directors’ interests in ordinary shares
The directors, who held office at 31 December 2016, had the following
interests in the ordinary shares of the Company:
The review of future developments and the use of financial instruments
and financial risk management policies are covered in the Strategic
Report. Details of directors’ remuneration and share options are given
in the Directors’ Remuneration Report.
Research and development
During the year ended 31 December 2016, the Group has
invested £2,418,000 (2015: £1,355,000) 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 16 May 2017, 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
Woodford Investment Management LLP
21,091,651
23.1%
Lansdowne Partners International Limited
16,923,111
18.5%
Richard Griffiths
Leonard Licht
Southampton Asset Management Limited
3,600,000
10,136,512
11.1%
3,700,000
4.1%
3.9%
Directors
The directors of the Company during the year ended 31 December
2016 were:
Executive directors:
Richard Marsden (Chief Executive Officer)
Dr Phillip Monk (Chief Scientific Officer)
John Ward (Finance Director)
Non-executive directors:
Simon Shaw (Chairman)
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate CBE
Richard Marsden
Dr Phillip Monk
John Ward
Simon Shaw (i)
Iain Buchanan
Dr Bruce Campbell (ii)
Paul Clegg (iii)
Prof. Stephen Holgate (iv)
1 January and 31 December 2016
Number of shares
154,432
183,439
276,506
1,474,096
112,741
294,259
204,244
858,360
(i) Simon Shaw’s shareholding includes 105,516 shares held in his pension plan.
(ii) Dr Bruce Campbell’s shareholding includes 40,299 shares owned by his wife,
Susan Campbell.
(iii) Paul Clegg’s shareholding includes 180,149 shares held in his pension plan.
(iv) Prof. Stephen Holgate’s shareholding includes 1,923 shares owned by his wife,
Elizabeth Holgate.
Between 31 December 2016 and the date of this report there has
been no change in the interests of directors in shares 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.
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
16 May 2017
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 2016 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. During the year with
the introduction of biannual Scientific Advisory Board meetings the
number of scheduled full Board meetings per year (‘Scheduled Board
meetings’) was reduced from seven meetings to five meetings. It also
meets on any other occasions it considers necessary. During the year
ended 31 December 2016, the Board met six times for Scheduled
Board meetings, 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
6
6
6
6
6
6
6
6
6
6
5
6
5
6
6
4
In addition there were three other meetings, to which Board members
were invited, during the year.
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.
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 2016, the committee met four
times with Simon Shaw and Iain Buchanan attending all meetings and
Dr Bruce Campbell three meetings.
13 | Synairgen plc annual report and accounts 2016 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2016 | 14
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
16 May 2017
Corporate Governance
(continued)
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 2016, the committee met
three times with Paul Clegg and Simon Shaw attending all meetings
and Dr Bruce Campbell two meetings.
Scientific Advisory Board
During the year the Company established a Scientific Advisory Board
(‘SAB’). The purpose of the SAB is to provide strategic advice and input
on scientific aspects of Synairgen’s research and development projects.
The SAB currently comprises Dr Phillip Monk (Chairman), Iain Buchanan,
Dr Bruce Campbell, and Synairgen’s three academic founders
(Professors Stephen Holgate, Donna Davies and Ratko Djukanovic).
Other external experts and Synairgen employees attend meetings as
required. The SAB meets biannually on a scheduled basis with extra
meetings as required. Dr Bruce Campbell is responsible for feeding
back the outputs from the SAB to the Company’s Board.
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.
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 15. The members of the Committee are Paul Clegg (Chairman),
Dr Bruce Campbell and Simon Shaw.
The Committee, which is required to meet at least twice a year, met
three times during the year ended 31 December 2016. 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 long term incentive plan (‘LTIP’) awards, is
performance driven.
Executive remuneration currently comprises a base salary, an annual
performance-related bonus, LTIP participation, 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.
The previous salary and benefit review took effect from 1 January
2016. It is anticipated that the next review will take place in July 2017
taking into account Group and individual performance, external
benchmark information and internal relativities.
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.
Directors’ remuneration for the year ended 31 December 2016 is
set out on page 18 of this document.
(ii) Chairman and non-executive director remuneration
The Chairman and the non-executive directors receive a fixed fee
of £25,000 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. The non-executive directors are also reimbursed
for all reasonable expenses incurred in attending meetings.
(iii) Annual bonus plan
The Company operates a discretionary bonus scheme for executive
directors for delivery of exceptional performance against relevant
corporate objectives, which are subject to malus and clawback
provisions. No bonuses were awarded for the year ended
31 December 2016.
(iv) Equity-based incentive schemes
The Committee strongly believes that long term 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) is the sole on-going 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.
No LTIP grants were made in 2016.
Executive directors are expected to retain no fewer than 50% of shares
acquired upon vesting of awards under the LTIP, net of shares sold to
pay 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.
15 | Synairgen plc annual report and accounts 2016 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2016 | 16
Directors’ Remuneration Report
(continued)
Performance conditions for the 2013, 2014 and 2015 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:
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%.
No awards became exercisable during 2016 as the performance
criteria conditions for the awards granted in 2013 were not met and
accordingly these awards lapsed.
(v) 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.
TSR growth over the performance
period less percentage increase in the
techMARK mediscience™ index over
the same period
Less than 0%
0%
10%
20%
Vesting percentage
of total number of shares
subject to award
During the year ended 31 December 2016, the executive directors did
not hold any non-executive directorships with other companies.
0%
25%
50%
100%
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.
Performance between the steps
Pro-rata on a straight-line basis
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 2016
Lapsed during
the year
At 31 December 2016
Exercise
price
Earliest
exercise date
Richard Marsden
7 September 2009
8 September 2010
21 September 2011
11 March 2013
3 November 2014
27 October 2015
Dr Phillip Monk
21 September 2011
11 March 2013
3 November 2014
27 October 2015
John Ward
7 September 2009
8 September 2010
21 September 2011
11 March 2013
3 November 2014
27 October 2015
605,000
246,889
538,063
245,732
313,827
387,931
400,212
182,776
233,425
280,172
100,000
224,445
489,148
223,393
285,297
301,724
–
–
–
(245,732)
–
–
–
(182,776)
–
–
–
–
–
(223,393)
–
–
No options were exercised by directors during the year.
605,000
246,889
538,063
–
313,827
387,931
400,212
–
233,425
280,172
100,000
224,445
489,148
–
285,297
301,724
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
Expiry date
6 Sept 2019
7 Sept 2020
7 Sept 2012
8 Sept 2013
21 Sept 2014
20 Sept 2021
11 Mar 2016
3 Nov 2017
27 Oct 2018
10 Mar 2023
2 Nov 2024
26 Oct 2025
11 Mar 2016
3 Nov 2017
27 Oct 2018
7 Sept 2012
8 Sept 2013
10 Mar 2023
2 Nov 2024
26 Oct 2025
6 Sept 2019
7 Sept 2020
21 Sept 2014
20 Sept 2021
11 Mar 2016
3 Nov 2017
27 Oct 2018
10 Mar 2023
2 Nov 2024
26 Oct 2025
21 Sept 2014
20 Sept 2021
Dr Bruce Campbell
Other options granted under the Synairgen plc Staff Option Scheme
Date of grant
Dr Phillip Monk
2 October 2006
At 1 January
2016
Lapsed during
the year
At 31 December
2016
Exercise
price
Earliest
exercise date
Expiry date
50,000
(50,000)
–
85.5p
2 Oct 2009
1 Oct 2016
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 2016
Exercise
price
Earliest
exercise date
Expiry date
212,765
23.5p
28 June 2013
27 June 2020
250,000
20p
7 Sept 2012
6 Sept 2019
These awards were granted under a legacy plan. 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 2016 was 14.0p. During the year then ended, the mid-market price ranged from 13.5p to 37.0p. On 16 May 2017 the closing price was 11.25p.
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 2016 and has been audited by the
Company’s auditor, BDO LLP.
Directors’ remuneration
The remuneration received by directors who served during the years ended 31 December 2016 and 2015 was as follows:
£000
Executive Directors
Richard Marsden
Dr Phillip Monk
John Ward
Non-executive Directors
Simon Shaw
Iain Buchanan
Paul Clegg
Prof. Stephen Holgate
Total
Note
(i)
Salary/
fee
Benefits
182
131
141
30
25
25
30
25
589
2
–
2
–
–
–
–
–
4
Year ended 31 December 2016
Total (incl.
pension)
Pension
Total (excl.
pension)
Year ended 31 December 2015
Total (incl.
pension)
Pension
Total (excl.
pension)
184
131
143
30
25
25
30
25
16
12
13
–
–
–
–
–
200
143
156
30
25
25
30
25
255
182
198
30
25
25
30
25
16
12
13
–
–
–
–
–
271
194
211
30
25
25
30
25
593
41
634
770
41
811
(i) Richard Marsden was the highest paid director during the years ended 31 December 2016 and 2015. He did not exercise any options during either year.
(ii) The Company permits employees, including executive directors, to change their pension provision through an election under a flexible benefits arrangement.
The reported numbers are before any personal elections.
In respect of key management personnel, for the year ended 31 December 2016, the total share-based payment amounted to £121,000
(2015: £137,000) and total social security costs were £59,000 (2015: £86,000).
By order of the Board
Paul Clegg
Chairman of the Remuneration and Nomination Committee
16 May 2017
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LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2016 | 18
Statement of Directors’ responsibilities in respect
of the Annual Report and the Financial Statements
Independent Auditor’s Report
to the members of Synairgen plc
The directors are responsible for preparing 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 Financial Reporting Standard 100 Application of Financial
Reporting Requirements and Financial Reporting Standard 101
Reduced Disclosure Framework 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
16 May 2017
We have audited the financial statements of Synairgen plc for the year
ended 31 December 2016 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, the Parent Company Statement of Changes in Equity 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), including Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’.
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 Financial Reporting Council’s (FRC’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 2016 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, based on the work undertaken in the course of
the audit:
• the information given in the strategic report and directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.
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.
Kim Hayward (senior statutory auditor)
For and on behalf of
BDO LLP, statutory auditor
Southampton
United Kingdom
16 May 2017
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2016
Consolidated Statement
of Financial Position
as at 31 December 2016
Year ended
31 December 2016
£000
Year ended
31 December 2015
£000
Notes
–
(2,418)
(1,024)
(3,442)
(3,442)
38
(3,404)
587
25
(1,355)
(1,279)
(2,634)
(2,609)
50
(2,559)
304
(3.08p)
(2.47p)
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Current tax receivable
Trade and other receivables
(2,817)
(2,255)
Other financial assets – bank deposits
Revenue
Research and development expenditure
Other administrative expenses
Total administrative expenses
Loss from operations
Finance income
Loss before tax
Tax
Loss and total comprehensive loss for the
period attributable to equity holders of the parent
Loss per ordinary share
Basic and diluted loss per share (pence)
Consolidated Statement
of Changes in Equity
for the year ended 31 December 2016
4
6
7
8
Note
At 1 January 2015
Recognition of share-based payments
Total comprehensive loss for the year
At 31 December 2015
Issuance of ordinary shares
Recognition of share-based payments
Total comprehensive loss for the year
At 31 December 2016
Share
capital
£000
Share
premium
£000
Merger
reserve
£000
Retained
deficit
£000
Total
£000
18a
913
–
–
18b
25,771
–
–
18c
483
–
–
18d
(17,731)
9,436
166
166
(2,255)
(2,255)
913
25,771
483
(19,820)
7,347
1
–
–
–
–
–
–
–
–
–
154
1
154
(2,817)
(2,817)
914
25,771
483
(22,483)
4,685
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 2016
£000
31 December 2015
£000
9
10
11
12
13
14
15
17
17
18
18
62
13
75
55
560
90
1,661
3,104
5,470
5,545
(860)
(860)
4,685
914
25,771
483
(22,483)
4,685
81
17
98
56
303
112
3,722
3,992
8,185
8,283
(936)
(936)
7,347
913
25,771
483
(19,820)
7,347
The financial statements on pages 21 to 34 were approved and authorised for issue by the Board of directors on 16 May 2017 and signed on its
behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
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Consolidated Statement of Cash Flows
for the year ended 31 December 2016
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance income
Depreciation
Amortisation
Share-based payment charge
Year ended
31 December 2016
£000
Year ended
31 December 2015
£000
(3,404)
(2,559)
(38)
9
19
154
(50)
10
21
166
Cash flows from operations before changes in working capital
(3,260)
(2,412)
Decrease in inventories
Decrease/(Increase) in trade and other receivables
(Decrease)/Increase 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
Decrease in other financial assets
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
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
1
17
(76)
(3,318)
330
(2,988)
43
(5)
2,061
2,099
1
1
(888)
3,992
3,104
–
(18)
441
(1,989)
56
(1,933)
58
(10)
3,030
3,078
–
–
1,145
2,847
3,992
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.
The accounting policies adopted are consistent with those of the previous financial year.
The following amendments to standards have been adopted and are effective for the current year:
IAS 1
IAS 27
Presentation of Financial Statements
Equity Method in Separate Financial Statements
The adoption of these pronouncements has not impacted the classification or measurement of the Group’s assets and liabilities.
New standards and interpretations not applied
IASB has issued the following relevant standards and interpretations with an effective date for periods commencing after 1 January 2016:
Standard or
interpretation
Title
IFRS 2
IFRS 9
Share-based Payments (Classification and Measurement of Share-based Payment Transactions)
Financial Instruments
IFRS 15
Revenue from Contracts with Customers
IFRS 16
Leases
IAS 7
Statement of Cash Flows
IFRIC 22
Foreign Currency Transactions and Advance Consideration
Effective for periods
beginning on or after
1 January 2018
1 January 2018
1 January 2018
1 January 2019
1 January 2017
1 January 2018
The Directors do not anticipate that the adoption of the 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 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.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (continued)
1. Accounting policies (continued)
1. Accounting policies (continued)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (as detailed in
Note 4 to the Parent Company Financial Statements on page 38) made up to the reporting date. Control is achieved when power can be exercised
over the investee; there is exposure, or rights, to variable returns from involvement with the investee; and the ability to exercise power over the
investee affects returns. 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.
Revenue
Revenue is stated net of value added tax and is recognised when products or services are supplied. Revenues from licensing agreements, including
up-front and milestone payments, are recognised where the milestone has been accomplished, the payments are non-refundable, the Group’s
obligations to the revenues have been discharged and their collection is reasonably assured, and the transfer of risk has occurred.
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 at the date of grant 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. 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:
3 years
5 years
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.
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.
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 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.
There are no critical accounting estimates and judgements.
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. The revenue generated in 2015 was generated from a single customer.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (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
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 Group and
Company 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
2016
£000
9
19
70
93
2016
£000
17
11
5
11
3
47
2016
9
3
12
2016
£000
766
95
80
941
5
154
1,100
2015
£000
10
21
78
93
2015
£000
12
11
7
14
9
53
2015
9
3
12
2015
£000
909
114
56
1,079
2
166
1,247
For the purpose of presentation in the Consolidated Statement of Comprehensive Income, remuneration costs of £580,000 (2015: £581,000) are
included in research and development expenditure and £520,000 (2015: £666,000) 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 page 18, which are ascribed
as forming part of these financial statements.
6. Finance income
For the years ended 31 December 2016 and 2015 Finance income represents 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
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 20% (2015: 20.25%). 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:
Tax relief on share option exercises
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
2016
£000
(560)
(27)
(587)
2016
£000
(3,404)
(681)
(2)
31
(471)
212
351
(27)
(587)
2015
£000
(303)
(1)
(304)
2015
£000
(2,559)
(518)
–
35
(258)
120
318
(1)
(304)
Deferred taxation
Changes in tax rates and factors affecting the future tax charge
Finance Act 2015 included provision for the main rate of corporation tax to reduce from 20% to 19% on 1 April 2017, and to 18% on 1 April 2020.
Finance Act 2016 included provision for the rate to reduce further to 17% on 1 April 2020. This will reduce the Company’s future tax charge
accordingly. This further rate change was substantively enacted on the 15 September 2016. Accordingly, deferred tax balances have been
recognised at 17%, 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
2016
£000
1
(1)
–
2015
£000
2
(2)
–
Unrecognised deferred taxation
At 31 December 2016 the Group has trading losses carried forward which are available for offset against future profits of the Group amounting
to £13,341,000 (2015: £11,917,000) and non-trading losses of £1,812,000 (2015: £1,605,000). At 31 December 2016 the Group has an unrecognised
deferred tax asset in respect of these losses of £2,576,000 (2015: £2,434,000). 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 £535,000 (2015: £902,000) and
a deferred tax asset of £91,000 (2015: £162,000) 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.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (continued)
7. Taxation continued
The movement on the unrecognised deferred tax asset comprises the following:
10. Property, plant and equipment
Computer
equipment
£000
Laboratory and
clinical equipment
£000
Unrecognised deferred tax asset at the start of the year
Movement in year
Unrecognised deferred tax asset at the year-end
8. Loss per ordinary share
Loss attributable to equity holders of the Company (£000)
Weighted average number of ordinary shares in issue
Basic and diluted loss per share (pence)
2016
£000
(2,596)
(71)
(2,667)
2016
(2,817)
2015
£000
(2,618)
22
(2,596)
2015
(2,255)
91,351,441
91,316,671
(3.08)
(2.47)
Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the parent company by the weighted average
number of ordinary shares in issue during the year.
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings
per ordinary share are identical to those used for basic loss per share. This is because the exercise of share options would have the effect of reducing
the loss per ordinary share and is therefore antidilutive under the terms of IAS 33.
Cost
At 1 January 2015
Additions
At 31 December 2015
Additions
At 31 December 2016
Depreciation
At 1 January 2015
Charge for the year
At 31 December 2015
Charge for the year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
At 1 January 2015
11. Inventories
9. Intangible assets
Cost
At 1 January 2015, 31 December 2015 and 2016
Amortisation
At 1 January 2015
Charge for the year
At 31 December 2015
Charge for the year
At 31 December 2016
Net book amount
At 31 December 2016
At 31 December 2015
At 1 January 2015
Patent and licence costs
£000
212
110
21
131
19
150
62
81
102
Raw materials
Raw materials comprises the Group’s 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
31
5
36
1
37
18
8
26
6
32
5
10
13
126
5
131
4
135
122
2
124
3
127
8
7
4
2016
£000
55
2016
£000
49
41
90
2016
£000
1,661
2016
£000
3,104
Total
£000
157
10
167
5
172
140
10
150
9
159
13
17
17
2015
£000
56
2015
£000
17
95
112
2015
£000
3,722
2015
£000
3,992
At 31 December 2016 £62,000 (31 December 2015: £81,000) of the net book amount relates to interferon beta patent costs, which has a remaining
average amortisation period of 3 years (31 December 2015: 4 years).
Amounts receivable within one year:
Sterling fixed rate deposits of greater than three months’ maturity at inception
14. Cash and cash equivalents
Cash available on demand
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (continued)
15. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses and deferred income
16. Financial instruments
2016
£000
356
41
463
860
2015
£000
281
61
594
936
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 7 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)
2016
Book and
fair value
£000
2015
Book and
fair value
£000
4
1,661
3,104
4,769
11
3,722
3,992
7,725
16. Financial instruments (continued)
Sensitivity analysis
It is estimated that an increase of quarter of one percentage point in interest rates would have decreased the Group’s loss before taxation by
approximately £15,000 (2015: £22,000).
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
2016 and 31 December 2015 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 share premium
At 1 January 2015 and 31 December 2015
Issuance of ordinary shares
At 31 December 2016
Notes
(i)
Number
of shares
91,316,671
45,941
91,362,612
Ordinary shares
of 1p each
£000
913
1
914
Share
premium
£000
25,771
–
25,771
Total
£000
26,684
1
26,685
(i) 45,941 ordinary shares of 1p were issued on 30 March 2016 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
At the Company’s 2015 Annual General Meeting held on 22 June 2015 shareholders passed a special resolution removing the restriction on the
Company’s share capital and amending the articles of association of the Company so that the number of shares the Company can allot and issue
became unlimited.
Trade and other payables (less than one year)
(ii)
809
866
All issued shares are fully paid.
(i) Trade and other receivables shown above excludes amounts due in respect of prepayments and other taxes, which are not a contractual obligation to receive cash,
amounting to £86,000 (2015: £101,000).
(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 £51,000 (2015: £70,000).
Options
At 31 December 2016 there were options outstanding over 5,629,647 un-issued ordinary shares, equivalent to 6.2% of the issued share capital,
as follows:
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.
Interest rate risk
Interest rate risk profile of financial assets, excluding short-term debtors:
Australian Dollar
Canadian Dollar
Euro
Sterling
US Dollar
2016
Floating rate
financial assets
£000
2015
Floating rate
financial assets
£000
15
1
33
4,677
39
4,765
45
-
72
7,556
41
7,714
Date of grant
Approved EMI scheme
29 October 2007
Other schemes
7 September 2009 (LTIP)
7 September 2009 (QNEOS)
28 June 2010 (QNEOS)
8 September 2010 (LTIP)
21 September 2011 (LTIP)
3 November 2014 (LTIP)
27 October 2015 (LTIP)
Number of shares
Exercise price
Earliest exercise date
Latest exercise date
17,792
61.5p
29 October 2010
28 October 2017
705,000
250,000
212,765
471,334
1,696,609
1,054,106
1,222,041
5,629,647
1p
20p
23.5p
1p
1p
1p
1p
7 September 2012
6 September 2019
7 September 2012
6 September 2019
28 June 2013
27 June 2020
8 September 2013
7 September 2020
21 September 2014
20 September 2021
3 November 2017
2 November 2024
27 October 2018
26 October 2025
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 2016 had a weighted average period to maturity of 45 days and a weighted average annualised rate of interest of 0.85%
(2015: 38 days, 0.70%).
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (continued)
17. Share capital and share premium (continued)
18. Capital and reserves
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:
18a Share capital
Share capital represents the nominal value of shares issued.
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
6,587,094
–
(45,941)
(911,506)
5,629,647
2016
Weighted average
exercise price
3.8p
n/a
1.0p
9.4p
2.9p
2015
Weighted average
exercise price
5.0p
1.0p
n/a
35.1p
3.8p
Number
5,467,644
1,222,041
–
(102,591)
6,587,094
At 31 December 2016, 3,353,500 share options were capable of being exercised, with exercise prices ranging from 1p to 61.5p (2015: 3,489,556, with
exercise prices ranging from 1p to 85.5p). The options outstanding at 31 December 2016 had a weighted average remaining contractual life of 5.7
years (2015: 6.7 years). Vesting conditions are disclosed in the Directors’ Remuneration Report.
The Group uses a number of share-based incentive schemes as detailed above and in the Directors’ Remuneration Report on pages 16 to 18. The fair
value per award granted and the assumptions 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
29 Oct 2007
7 Sept 2009
7 Sept 2009
28 Jun 2010
8 Sept 2010
21 Sept 2011
3 Nov 2014
27 Oct 2015
EMI
LTIP
QNEOS
QNEOS
LTIP
LTIP
LTIP
LTIP
17,792
61.5p
705,000
250,000
1p
20p
212,765
23.5p
471,334
1,696,609
1,054,106
1,222,041
5,629,647
1p
1p
1p
1p
61.5p
18.5p
18.5p
23.5p
24.25p
22.5p
41.5p
29p
17.8p
7.1p
4.0p
5.6p
12.1p
13.4p
22.4p
14.2p
5
3
5
5
3
3
3
3
4.95%
2.09%
2.67%
2.09%
0.92%
0.79%
1.11%
0.71%
20%
30%
30%
30%
40%
56%
46%
38%
None
Market
Market
Market
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 2016 for share-based payment amounted to £154,000 (2015: £166,000).
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. Commitments under operating leases
The total future value of minimum lease payments committed at the balance sheet date under non-cancellable operating leases is due as follows:
Land, buildings and other
Not later than one year
Later than one year and not later than five years
Total
20. Related party transactions and balances
2016
£000
95
–
95
2015
£000
163
95
258
Details of key management personnel and their compensation are given in note 5 and on page 18 of the Directors’ Remuneration Report.
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Parent Company Balance Sheet
as at 31 December 2016
Notes to the Parent Company Financial Statements
for the year ended 31 December 2016
Notes
31 December 2016
£000
31 December 2015
£000
The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting
Requirements (‘FRS 100’) and Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).
1. Accounting policies
Basis of preparation
22,256
19,510
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101.
Therefore these financial statements do not include:
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
Retained earnings
Shareholders’ funds
4
5
6
102
1,661
3,063
4,826
(41)
4,785
27,041
914
25,771
356
27,041
15
3,722
3,879
7,616
(34)
7,582
27,092
913
25,771
408
27,092
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 Company’s loss for the year ended 31 December 2016 was £206,000 (2015: loss of £268,000).
The financial statements on pages 35 to 38 were approved and authorised for issue by the Board of directors on 16 May 2017 and
signed on its behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
Parent Company Statement of Changes in Equity
for the year ended 31 December 2016
At 1 January 2015
Loss for the year and total comprehensive loss
Share-based payment credit
At 31 December 2015
Issuance of ordinary shares
Loss for the year and total comprehensive loss
Share-based payment credit
At 31 December 2016
Share
capital
£000
913
Share premium
account
£000
25,771
–
–
913
1
–
–
914
–
–
25,771
–
–
–
25,771
Retained
earnings
£000
Shareholders’
funds
£000
510
(268)
166
408
–
(206)
154
356
27,194
(268)
166
27,092
1
(206)
154
27,041
• certain comparative information as otherwise required by EU-endorsed IFRS;
• certain disclosures regarding the Company’s capital;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management personnel; and
• disclosures of related party transactions with other wholly-owned members of Synairgen plc group of companies.
In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are
included in the Company’s consolidated financial statements. These financial statements do not include certain disclosures in respect of:
• share-based payments; or
• financial instruments.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of accounting
The financial statements have been prepared under the historical cost convention. The presentation currency used is sterling and
amounts have been presented in round thousands (‘£000s’).
Foreign currency
The financial statements are presented in UK pounds sterling, which is the Company’s functional currency.
Transactions entered into by the Company in a currency other than the currency of the primary economic environment in which it
operates (its ‘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 profit or loss.
Investment in subsidiary undertakings
Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a party to the
contractual provisions of the instrument.
Financial assets
The Company 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 Company 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.
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Notes to the Parent Company Financial Statements
Notes to the Parent Company Financial Statements
for the year ended 31 December 2016 (continued)
for the year ended 31 December 2016 (continued)
1. Accounting policies (continued)
The Company’s loans and receivables comprise debtors, investments: short-term deposits and cash and cash equivalents in the balance sheet. Other
financial assets comprise short-term deposits not meeting the 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 Company classifies its financial liabilities as financial liabilities held at amortised cost. Trade creditors are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest rate method.
Share-based payments
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.
4. Investments
At 1 January 2016
Additions
At 31 December 2016
Investment in
subsidiary
undertaking
£000
140
–
140
Loan to
subsidiary
undertaking
£000
17,924
2,592
20,516
Capital
contribution
£000
1,446
154
1,600
Total
£000
19,510
2,746
22,256
At 31 December 2016, the Company had an investment in the following subsidiary undertaking:
Name of company
Synairgen Research Limited
Registered
address
Proportion of voting rights
and ordinary share capital held
Nature of business
Mailpoint 810, Level F, South Block,
Southampton General Hospital,
Tremona Road,
Southhampton SO16 6YD
100%
Drug discovery and development
Share capital
The Group’s ordinary shares are classified as equity instruments. Financial instruments issued by the Company are classified as equity only to the
extent that they do not meet the definition of a financial liability or financial asset.
5. Debtors
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.
The Company holds a significant investment in its subsidiary, Synairgen Research Limited, of £22.3m (2015: £19.5m). In assessing the carrying value of
this asset for impairment, the directors must exercise judgement in estimating its recoverable amount. The key judgements and sources of estimation
relate to the methodology and discount rate applied, along with assumptions around the probability-adjusted future cash flows included in the model.
Other tax and social security
Prepayments and accrued income
All amounts fall due for payment within one year.
6. Creditors: amounts falling due within one year
3. Profit and loss account
The only employees of the Company during 2016 and 2015 were the three executive directors. Their aggregate remuneration, which is borne by
the Company’s subsidiary undertaking, comprised:
Trade creditors
Accruals and deferred income
2016
£000
2
100
102
2016
£000
5
36
41
2015
£000
2
13
15
2015
£000
4
30
34
7. Share capital and share premium
Details of the Company’s share capital, share premium, share option schemes and LTIP can be found in note 17 to the Group accounts on
pages 32 and 33.
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Total cash-settles remuneration
Accrued holiday pay
Share-based payment
Total Remuneration
2016
£000
450
59
47
556
5
121
682
2015
£000
630
86
41
757
2
137
896
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 page 18, which
are ascribed as forming part of these financial statements.
Auditor’s remuneration is disclosed in note 4 to the Group accounts on page 27.
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Corporate
Directory
Glossary
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 CBE
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
Advisers
Independent auditor
BDO LLP
Arcadia House, Maritime Walk,
Ocean Village, Southampton SO14 3TL
Bankers
HSBC Bank plc
165 High Street, Southampton SO14 2NZ
Financial public relations
Consilium Strategic Communications
41 Lothbury, London EC2R 7HG
Nominated adviser and broker
FinnCap Limited
60 New Broad Street, London EC2M 1JJ
Registrars
Capita Asset Services
The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU
Solicitors
Fladgate LLP
16 Great Queen Street, London WC2B 5DG
Acute
An acute disease is a disease with a
rapid onset and/or a short course
Adenovirus
A virus that can cause respiratory
disease (e.g. the common cold),
conjunctivitis and gastroenteritis
Airways (or bronchial tubes)
The tubes that carry air in and out of
the lungs
Allergen
A usually harmless substance capable
of triggering a response that starts in
the immune system and results in an
allergic reaction
Antibiotic
A drug that inhibits bacterial growth or
kills bacteria
Antiviral
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
AZD-9412
Inhaled interferon beta formulation
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 biochemical feature or facet that can
be used to measure the progress of
disease or the effects of treatment
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
Candidate
A candidate drug is a compound
(e.g. small molecule, antibody, etc.)
with strong therapeutic potential and
whose activity and specificity have
been optimised
CellScale MicroSquisher
A machine for measuring the stiffness
of tissue
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 (see
below) to conduct a clinical trial
Collagen
The main structural protein found in
skin and other connective tissues
COPD
Chronic Obstructive Pulmonary
Disease covers two conditions:
chronic bronchitis and
emphysema. COPD usually results
from long-term exposure of
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
Cross-link
A chemical bond that acts like
a glue, holding collagen fibres
together. Lysyl oxidase (LOX)
enzymes catalyse this process
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 airway
tubes in order to protect and
regulate the tissue underneath
Exacerbation
A rapid deterioration of a chronic
disease that makes the symptoms
worse
Fibroblast
A fibroblast is a type of cell that
synthesizes the extracellular
matrix and collagen, the structural
framework for animal tissues,
and plays a critical role in wound
healing
Fibroblastic focus
A hallmark of IPF lung tissue
characterised by dense collections
of fibroblasts (the cells that secrete
scar tissue)
Fibroblastic focus model
A laboratory model which uses cells
from IPF patients that replicates
the fibrotic lung
Fibrosis
The thickening and scarring of
connective tissue, usually as a
result of injury
Gene
A hereditary unit consisting of a
sequence of DNA that determines
a particular characteristic of a
living organism
Idiopathic Pulmonary Fibrosis
(IPF)
A disease in which tissue deep in
the lungs becomes thick and stiff,
or scarred, over time by unknown
cause. The formation of scar tissue
is called fibrosis. It usually affects
middle-aged and older people
INEXAS
AstraZeneca’s Phase IIa study
entitled ‘A Study in Asthma Patients
to Evaluate Efficacy, Safety and
Tolerability of 14 Days Once Daily
Inhaled Interferon Beta-1a After the
Onset of Symptoms of an Upper
Respiratory Tract Infection’
Interferon beta (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
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
Lysyl oxidase (LOX)
An enzyme responsible for the
maintenance of collagen and
elastin in tissues
Lysyl oxidase-like protein 2
(LOXL2), 3 (LOXL3), 4 (LOXL4)
Each is a member of a family of
enzymes which catalyses cross-
linking of collagen and elastin
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
Non-alcoholic steatohepatitis
(NASH)
A form of chronic liver disease in
adults and children
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 number of deaths
and illness
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
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
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Glossary (continued)
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
Phase III Clinical Trial
A full scale clinical trial to determine
drug efficacy and safety prior to
seeking marketing approval
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
Pre-candidate
A chemical compound that has
pharmacological or biological
activity likely to be therapeutically
useful but which has not yet met all
the criteria that are required to be
a candidate drug
Pre-clinical
A stage of drug development
preceding human clinical trials
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
RNA
Nucleic acid that is involved in
protein synthesis and transmission
of genetic information
Respiratory syncytial virus
(RSV)
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 influenza is a yearly
outbreak of influenza infection,
caused by influenza virus. The
seasonal influenza is somewhat
different every year, as influenza
viruses are always changing
Secondary/exploratory
endpoint
The second most important (or
additional) measure (or endpoint)
assessed in a clinical trial
Second harmonic generation
imaging
A microscopic technique for
generating images of collagen, the
major constituent of scar tissue
Severe asthma
Asthma which requires
treatment with high dose
inhaled corticosteroids plus a
second controller (and/or oral
corticosteroids) to prevent it from
becoming ‘uncontrolled’ or which
remains ‘uncontrolled’ despite
this therapy
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
TGF-β
A secreted protein that affects
cell growth, proliferation and
differentiation, which is a
particularly important driver
in fibrosis
TGF-β induced pulmonary
fibrosis model
A pre-clinical model in which TGF-β
overexpression in the lungs using
a non-replicating adenoviral vector
(which delivers genetic material)
causes a progressive lung fibrosis
Toxicology
The study of the nature and
mechanisms of deleterious effects
of chemicals on humans, animals
and other biological systems
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
Upper airway
The tubes in the nose and neck
which conduct air into the lung
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
41 | Synairgen plc annual report and accounts 2016 | www.synairgen.com | LSE:SNG
Synairgen plc,
Mailpoint 810,
Level F, South Block,
Southampton General Hospital
Tremona Road,
Southampton
SO16 6YD
United KIngdom
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