Annual Report
and Accounts
2020
a deeper
understanding
of respiratory
biology
Stock symbol: LSE:SNG
www.synairgen.com
Contents
Introduction
Highlights
Business Review
Chairman’s Statement
Strategic Report
Governance
Synairgen’s Founders
Directors
Corporate Governance Statement
Directors’ Remuneration Report
Report of the Audit Committee
Directors’ Report
Financials
Statement of Directors’ Responsibilities in
respect of the Annual Report and the
Financial Statements
Independent Auditor’s Report to the
members of Synairgen plc
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
2
3
5
16
17
19
23
28
29
30
31
37
37
38
39
Notes to the Consolidated Financial Statements 40
Parent Company Balance Sheet
53
Parent Company Statement of Changes in Equity 54
Notes to the Parent Company
Financial Statements
Other
Corporate Directory
Glossary
55
58
58
Highlights
(including post period-end)
Operational highlights
Financial highlights
• Positive results from Synairgen’s Phase II trial (SG016) of
inhaled interferon beta-1a (SNG001) in 101 hospitalised
COVID-19 patients reported in July 2020
– Further analyses announced in September 2020 and
trial data published in The Lancet Respiratory Medicine
in November 2020
• SG016 trial expanded to include a further 120 COVID-19
patients in the home environment
– Analysis of combined data from Hospital and Home Cohorts in
April 2021 showed that patients with significant breathlessness
are three times more likely to recover to “no limitation of
activities” on the OSCI scale when receiving SNG001 compared
to placebo (p=0.004)
• In October 2020, Synairgen raised £87.1 million (before
expenses) in an equity issue to fund SG018 Phase III trial,
SNG001 manufacturing, regulatory activities, and to
strengthen balance sheet
• In March 2020, Synairgen raised £14.0 million (before
expenses) in an equity issue to fund initial COVID-19
clinical trial activity
• The loss from operations for the year ended 31 December
2020 was £17.7 million (2019: £4.8 million), with research
and development expenditure amounting to £15.5 million
(2019: £3.5 million)
– £12.0 million year-on-year increase on research and
development expenditure attributable to COVID-19 activities
• SNG001 awarded Fast Track designation with IND cleared by
• Cash balances of £75.0 million at 31 December 2020
the US FDA in December 2020
(31 December 2019: £2.5 million)
• International Phase III trial (SG018) of SNG001 in hospitalised
COVID-19 patients initiated in December 2020
– First patient dosed in January 2021, initial trial results
expected in H2 2021
• SNG001 included in US NIH government-funded ACTIV-2
Phase II/III trial in COVID-19 outpatients in January 2021 and
commenced patient dosing in February 2021
– Phase II evaluation will see the recruitment of
up to 220 participants
• Investment in supply chain activities for SNG001 and
the Aerogen aerosol delivery system have been made in
preparation for launch
• Agreements signed with Akron Biotechnology for drug
substance manufacture and Catalent Biologics for fill/finish
• Positive data from interim analysis of SNG001 trial in COPD
patients supporting future progression of SNG001 for
exacerbating COPD patients
• Patent applications made for use of inhaled interferon beta-1a
to treat:
– COVID-19 patients
– Virus-induced exacerbations of COPD patients undergoing
treatment with systemic corticosteroids
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www.synairgen.com
Chairman’s Statement
Synairgen has made significant progress during 2020, from being
one of the first movers in the UK to begin clinical trials to combat
COVID-19, to ending the year with compelling clinical data and late-
stage clinical trials underway both in the UK and internationally
to investigate our inhaled interferon beta candidate (SNG001)
in patients with COVID-19. The year has been unprecedented
globally for all sectors, and the healthcare industry, and in
particular biotechnology, has played a central role. Synairgen’s
expanded team and speed to action has enabled the Company to
make significant strides in the fight against COVID-19. Synairgen
has a potential role to play in the provision of a life-saving
treatment against COVID-19 and other viruses, and in situations
where the various vaccines may not prove effective or suitable.
In July 2020, we received landmark positive results in the Phase II
study SG016 in hospitalised COVID-19 patients. This paved the
way for our follow-on trial in the home setting and, ultimately,
our larger multinational Phase III study SG018, which has been
approved to commence by regulators in 12 countries. The
importance of progress being made in trials of COVID-19
treatments cannot be understated. While vaccination efforts are
crucial to defeating the pandemic, we also need therapeutics to
save lives and to help those who become infected despite
vaccination. Based on the compelling data published in November
2020 in the Lancet Respiratory Medicine journal supported by
evidence from the recently announced home-based trial results,
we believe Synairgen’s inhaled interferon beta candidate could
play a critical role in addressing the impact of COVID-19 and
similar viruses by reducing the severity of the disease and
accelerating patient recovery.
The inclusion of SNG001 in the US government-funded
ACTIV-2 trial is a further indication of international interest
in our inhaled interferon beta treatment. Unlike many
other treatments, inhaled interferon beta, as a drug taken
through a nebuliser, can be self-administered at home under
virtual supervision, making it a key part of reducing strain
on healthcare systems, both through preventing severe
disease and through lowering the number of necessary
hospital visits for patients suffering respiratory symptoms.
These successes reflect the scientific research supporting the role
of interferons in orchestrating antiviral responses undertaken by
our scientific founders, Prof. Donna Davies, Prof. Ratko Djukanovic,
and Prof. Sir Stephen Holgate, who continue to play an active role
in Synairgen. 2021 is set to be an even more impactful year for
Synairgen pending the clinical results from our late-stage trials
evaluating SNG001. We are optimistic about the potential for
inhaled interferon beta as a potentially effective treatment for
COVID-19 and future viral outbreaks.
It has been a very challenging year for Synairgen’s staff, combining
the significant additional workload of our COVID-19 programmes
and an escalation of our manufacturing and commercialisation
strategies with the logistical limitations of lockdown and travel
restrictions. On behalf of the Board, I wholeheartedly thank
our staff and outsourced contractors for their hard work,
perseverance and resilience.
Thanks to the support of our shareholders, Synairgen is in a
robust financial position following two oversubscribed fundraises
during the year. We continue to scale up operations and prepare
for commercialisation of the product and look forward to
reporting further progress in the coming months.
Simon Shaw
Chairman
11 May 2021
.
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Strategic Report
The directors present their Strategic Report
for the year ended 31 December 2020.
Principal Activities and Strategy
Synairgen plc (the ‘Company’) is the holding company for
Synairgen Research Limited, a respiratory drug discovery
and development company.
Synairgen is developing a broad-spectrum inhaled
antiviral for the treatment of severe viral lung infections
and is currently conducting a Phase III clinical trial for
COVID-19. Launch preparations are underway, which
may involve licensing or partnership. A glossary on pages
58 to 61 provides additional explanation of some of the
more detailed scientific and clinical terminology.
Operating Review
Summary
2020 was an unprecedented year for Synairgen. We were able
to respond rapidly to the COVID-19 crisis and continue on our
mission to bring our inhaled interferon beta-1a drug product to
patients for the treatment of COVID-19.
SNG001 has potential value in three settings:
1. The near term business objective is to gain registrations
as soon as possible to treat patients with COVID-19:
(i)
in the hospital setting, to prevent further deterioration
and death, and to accelerate discharge from hospital
and rate of recovery;
(ii) in non-hospitalised patients with significant
breathlessness, to prevent hospitalisation and
accelerate recovery; and
(iii) to reduce the number of patients who develop Long COVID
2. The medium term business objective is to work with
governments to prepare for the next pandemic. The
SARS-CoV-2 pandemic has demonstrated the value of
being prepared. Providing SNG001 trials continue to
produce positive data, SNG001, as a broad-spectrum
antiviral, could be stockpiled for future pandemics. It
can be stored in concentrated form in freezers for over
six years, and in ready to use format for three years.
3. The long term business model envisages applying SNG001’s
broad-spectrum antiviral activity to treat patients hospitalised
on account of a severe viral lung infection. Chest infections are
the fifth largest cause of death globally1 and approximately
half of chest infections have a viral component.2
Progress in 2020
During the year Synairgen made significant clinical progress
with its inhaled formulation of interferon beta, SNG001. Results
from the SG016 Phase II trial of SNG001 in 101 hospitalised
COVID-19 patients support its use as a valuable treatment option
to prevent development of severe disease and to expedite
patient recovery. Further safety, efficacy and other supporting
data were provided from the interim analysis of Synairgen’s
SG015 Phase II COPD trial in September 2020. Expansion of
the SG016 trial to include an additional 120 patients treated
in the home environment was completed post period-end in
January 2021, with analysis of the combined data from the
Hospital and Home Cohorts announced in April 2021 showing
that the more breathless patients are significantly more likely to
recover to “no limitation of activities” on SNG001 than placebo.
Based on the positive outcome of these Phase II results,
SNG001 is being trialled in COVID-19 patients around the
world. Synairgen has initiated an international Phase III trial
(SG018), which will involve a total of 610 hospitalised COVID-19
patients who require supplemental oxygen. Our inhaled
interferon beta has also been included in the US government-
funded ACTIV-2 Phase II/III trial in COVID-19 outpatients.
Dosing began in both trials post period-end in Q1 2021.
The Company is currently focused on progressing these trials to
produce the data for accelerated regulatory approvals of SNG001
as a COVID-19 treatment. We are also working on the supply chain
in preparation for launch.
COVID-19
COVID-19, caused by the SARS-CoV-2 virus, is a global pandemic
and there has been, and continues to be, an urgent need to
assess new treatments to prevent and effectively treat the
severe lower respiratory tract illness that can occur with
this disease. Older people and those with co-morbidities
such as obesity, heart and lung complications or diabetes
are at greatest risk of developing severe or fatal disease.
The SARS-CoV-2 knowledge base is continually expanding
with respect to transmissibility and pathogenicity of
the virus and its variants, and the effectiveness of the
interventions, which include social distancing, vaccines
and therapeutics. The need for a therapeutic persists to
cover the possibility that vaccine effectiveness wanes,
or that vaccine rollout and uptake is sub-optimal.
Rationale for the use of inhaled interferon beta
to treat COVID-19
Interferon beta (‘IFN-beta’) is a naturally-occurring protein,
orchestrating the body’s antiviral responses. There is growing
evidence that deficiency in IFN-beta production by the lung could
explain the enhanced susceptibility in ‘at-risk’ patient groups to
developing severe lower respiratory tract (lung) disease during
respiratory viral infections. Furthermore, viruses, including
coronaviruses such as SARS-CoV-2, have evolved mechanisms
to suppress endogenous IFN-beta production, helping the virus
to evade the innate immune system. The addition of exogenous
IFN-beta before or during viral infection of lung cells in vitro either
prevents or greatly reduces viral replication. The Company is
currently conducting further in vitro testing of SNG001 against
two SARS-CoV-2 variants. Synairgen’s SNG001 is a formulation
containing the fully glycosylated form of IFN-beta (IFN-beta-1a)
for direct delivery to the lungs via specific nebulisers. It is near to
pH neutral, and is free of mannitol, arginine and human serum
albumin, which may be pharmacologically active in the airways,
making it suitable for inhaled delivery direct to the site of infection,
where the aim is to halt progression of disease, reduce duration of
stay in hospital and prevent further deterioration and death.
The inhaled route of delivery is necessary if levels of IFN-beta are
to be attained in the lungs at the concentration needed to drive
antiviral activity. We believe these concentrations could not be
accomplished at the lining of the lungs via the injected route.
COVID-19 Phase II trial – SG016
Synairgen’s Phase II clinical trial in COVID-19 patients, SG016, was a
double-blind, placebo-controlled trial. The two cohort 221 patient
trial comprised 101 patients randomised in the hospital setting
(initial results reported 20 July with further analyses announced
in September 2020), and a further 120 patients randomised in
the home setting (trial recruitment completed, with initial data
announced in April 2021).
SG016: Hospital Cohort
Synairgen’s Phase II trial of SNG001 in hospitalised COVID-19
patients was conducted across nine NHS trusts in the UK and
was adopted by the NIHR Respiratory Translational Research
Collaboration, who gave it Urgent Public Health status.
The design of this trial, which began dosing patients in March 2020,
was based on the recommendations contained within the World
Health Organization (WHO) R&D Blueprint Novel Coronavirus
COVID-19 Therapeutic Trial Synopsis issued in February 2020.
On 20 July 2020, the Company announced positive top-line results
from the trial with further analyses announced in September 2020.
The primary endpoint was the change in condition assessed using
the WHO Ordinal Scale for Clinical Improvement (OSCI) during the
dosing period.
In November, these results were published in the peer-reviewed
Lancet Respiratory Medicine journal. The full title of the publication
is: “Safety and efficacy of inhaled nebulised interferon beta-1a (SNG001)
for treatment of SARS-CoV-2 infection: a randomised, double-blind,
placebo-controlled, phase 2 trial”.
Key findings included:
• The odds of improvement across the entire OSCI scale were
more than two-fold greater in the SNG001 group than the
placebo group at the end of the treatment period in both the
ITT (Intention-To-Treat) population (OR 2.32; p=0.033) and the
PP (Per Protocol) population (OR 2.80; p=0.017).
• There was a trend towards reduced odds of progression to
severe disease (requiring non-invasive ventilation, high-flow
oxygen, intubation and mechanical ventilation) or death in the
ITT population (72% reduction; p=0.064) that became significant
in the PP population (82% reduction; p=0.041).
• Patients who received SNG001 were more than twice as likely
to recover (defined as ”no limitation of activities” or “no clinical
or virological evidence of infection”) over the course of the
treatment period compared to those receiving placebo in both
the ITT population (HR 2.19; p=0.043) and the PP population
(HR 2.29; p=0.033).
• Over the treatment period, patient-reported Breathlessness
Cough and Sputum Scale (BCSS) and in particular breathlessness
scores were markedly reduced in patients who received SNG001
compared to those receiving placebo (p=0.026 for BCSS and
p=0.007 for breathlessness).
• Three subjects (6%) died after being randomised to placebo.
There were no deaths among subjects treated with SNG001.
Other findings included:
• The median duration of COVID-19 symptoms at the
point dosing commenced was 10 days. This goes against
conventional wisdom with IFN-beta usage, where efficacy is
expected based on early use. If treatment is administered
to hospitalised patients after 10 days of illness, then this
is late in terms of time (because the patient has been
ill for 10 days) and late in terms of illness severity.
• Odds ratios for improvement, recovery and hospital discharge
were in favour of SNG001 at day 28 suggesting that the
treatment effect extends beyond the end of the dosing period.
A treatment that accelerates full recovery may be especially
relevant to patients with COVID-19 who experience wide-ranging
long-term symptoms for at least a month and sometimes longer
(known as Long COVID or Long-haul COVID).
• SNG001 was well tolerated.
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Strategic Report
(continued)
SG016: Home Cohort
In April 2020, Synairgen received approvals to extend the SG016
trial into the home environment, with the objective of initiating
dosing earlier in the infection cycle of COVID-19 to prevent
severe lower respiratory tract symptoms. The trial recruited
patients who were either aged over 65, or over 50 with a high-
risk comorbidity. Patients must have had symptoms for less
than eight days. The trial was fully recruited in January 2021.
The Home Cohort trial involved SNG001 (or placebo) being
delivered to eligible participants by couriers observing appropriate
social distancing measures. In order to minimise risks to patients
and healthcare workers in this setting, all visits were conducted
remotely by video link. If positive for SARS-CoV-2, the drug (placebo
or SNG001), aerosol delivery device, and other trial equipment
were despatched to the patient. Each dose was taken under video
supervision. Safety and efficacy endpoints were also assessed
during the video calls.
The study confirmed the feasibility of rapid roll-out of antiviral
treatment in the context of a pandemic, where there is a need to
limit the movement of people to minimise risks to patients, the
public and healthcare providers.
The top-line results from the Home Cohort and combined data for
the whole SG016 trial were announced in April 2021 and the key
findings were:
• The vast majority of Home Cohort patients experienced mild
disease – only two patients were hospitalised due to worsening
of COVID-19 during the treatment period, both on placebo.
• Home Cohort patients successfully self-administered SNG001.
• Encouraging pattern of recovery and reduction in breathlessness
in SNG001-treated patients compared to placebo in those with
marked or severe breathlessness at the start of treatment.
• A combined analysis of the Hospital and Home Cohorts data
was conducted to explore the impact of the different levels of
breathlessness, which is one of the most prominent symptoms
of COVID-19, on time to recovery.
• An assessment of only those patients on placebo indicated
that those with marked or severe breathlessness at time of
treatment initiation had slower recovery to “no limitation of
activities” than those patients who were not as breathless. This
is a strong indicator of those patients who should be selected
for treatment with SNG001.
• In the Hospital Cohort (reported in July 2020) patients were
2.19 times more likely to recover to level 1 on the Ordinal Scale
compared to placebo, HR 2.19; p=0.043. The addition of the 12
markedly and severely breathless Home Cohort patients further
improves the Hazard Ratio to 2.49; p=0.009.
• Interestingly, not all hospitalised patients were markedly or
severely breathless at time of treatment initiation. An analysis
including only patients who were markedly or severely
breathless at the time of treatment initiation, irrespective of
whether they were in hospital or at home, showed that those
treated with SNG001 (n=33) were 3.41 times more likely to
recover than those on placebo (n=36) (HR 3.41; p=0.004). This
further underlines the potential benefit of SNG001 for patients
identified as breathless.
The data from the Home Cohort and the combined data analysis
showing the potential importance of breathlessness as a
stratification tool to identify patients most likely to benefit from
SNG001 is invaluable. We now know better who not to treat and
who to treat. Fortunately, when we designed the Phase III clinical
trial, we selected patients most likely to be breathless and these
data make us feel more confident of a positive outcome.
COVID-19 Phase III trial – SG018
Synairgen’s global Phase III “SPRINTER” clinical trial in hospitalised
COVID-19 patients, SG018, is a randomised, placebo-controlled
study being conducted in 17 countries enrolling a total of 610
COVID-19 patients who require supplemental oxygen (i.e. they are
by definition more likely to have marked or severe breathlessness).
After reporting the results for the primary and secondary endpoints
of the study, enrolled patients will continue to be assessed for
Long COVID symptoms.
In October 2020, Synairgen appointed Parexel Biotech, a division
of the leading global clinical research organisation, Parexel, to help
conduct the Phase III trial. The trial is deemed an Urgent Public
Health study by the UK’s National Institute for Health Research
(NIHR). In the US, SNG001 has been granted Fast Track status from
the US Food and Drug Administration (FDA).
There are two primary endpoints: ‘time to recovery to “no limitation
of activities” up to Day 28’; and ‘time to hospital discharge’. In addition,
there are secondary endpoints relating to changes in OSCI score
and symptoms, especially breathlessness, and Long COVID.
There will also be a safety assessment.
First patient dosing commenced in the UK in January 2021, where
the regulators were familiar with SNG001. The trial is now approved
by regulators in 11 additional countries, with further approvals
expected in five more countries in the coming weeks. Initial trial
results are expected in H2 2021.
US NIH ACTIV-2 trial
In January 2021, Synairgen announced signature of a clinical
trial agreement to include SNG001 in the ACTIV-2/A5401
Phase II/III trial in patients with COVID-19 not yet requiring
hospitalisation. This is a government-funded trial sponsored
by the US National Institute of Allergy and Infectious Diseases
(NIAID), part of the US National Institutes of Health (NIH). NIH’s
ACTIV (Accelerating COVID-19 Therapeutic Inventions and
Vaccines) is a public-private partnership to develop a coordinated
research strategy to speed up the development of the most
promising treatments and vaccine candidates for COVID-19.
ACTIV-2 is a master protocol designed for evaluating multiple
investigational agents compared to placebo in adults with
mild-to-moderate COVID-19, not requiring hospitalisation.
The Phase II/III study is an adaptive, randomised, blinded,
placebo-controlled trial which commenced patient dosing in
February 2021. The Phase II evaluation of inhaled interferon
beta will see the recruitment of up to a maximum of 220
participants across US sites in home-based settings. A positive
result enables progression into the Phase III stage of the study.
As in the case with the Home Cohort of Synairgen’s Phase II study,
the inclusion in another home-based trial reflects the ease of use
that inhaled treatments offer, making it possible for patients to
self-administer treatment at home with professional supervision,
reducing the risk of virus transmission during hospital visits and
reducing pressure on healthcare systems. At-home treatments also
have the potential to be taken earlier in the course of the illness,
preventing the progression of the virus in the lower respiratory
tract and the concomitant risk of hospitalisation, which could
be of very significant benefit if hospitals are overstretched.
Manufacturing and Delivery of SNG001
In preparation for gaining approval for inhaled interferon
beta, the Company announced deals in October with
Akron Biotechnology and Catalent Biologics.
Akron Biotechnology is manufacturing inhaled interferon beta
drug substance to meet clinical and commercial demand.
Catalent Biologics is a leading global provider of advanced
development and manufacturing solutions for drugs and
biologics, and is supporting the inhaled interferon beta fill/
finish at its Brussels, Belgium facility, where it is conducting
manufacturing scale-up of the drug candidate into pre-
filled syringes. The Company is also evaluating blow fill
seal technology as an alternative to glass syringes.
Synairgen is collaborating with Aerogen, a leader in high-
performance aerosol drug delivery in the acute care setting.
Aerogen is providing the Aerogen Solo/Ultra aerosol delivery
system, which is already widely used in hospitals in the EU and
US, for delivery of SNG001 directly into the lungs of patients.
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Strategic Report
(continued)
Managed Access Program
In September 2020, Synairgen put in place a Managed Access
Program facility with Clinigen to enable physicians in the
UK and EU to access SNG001 for hospitalised patients.
Chronic Obstructive Pulmonary Disease (COPD)
COPD is a progressive lung disease, punctuated by periods of
exacerbation characterised by acute worsening of symptoms which
require treatment with oral corticosteroids and/or antibiotics, which
have major implications for both the patient and the healthcare
system. Worldwide, COPD affects approximately 384 million
people3 and is the third leading cause of death according to the
World Health Organisation.4 COPD exacerbations are the second
most common cause of unplanned hospitalisation in England.5
COPD trial – SG015
In 2018, Synairgen commenced a two-part COPD trial (SG015)
to assess the safety and lung antiviral biomarker and efficacy
responses to SNG001 in the absence of viral infection. In the
first part of the trial, SNG001 was well tolerated in patients with
moderate to severe COPD. We also observed a strong antiviral
biomarker signal, which was comparable to the response
previously observed in asthma. This paved the way to proceed
into the second part of the trial, which was designed to dose 120
patients with confirmed, naturally-occurring, respiratory virus
infections and in addition to look at lung function. Recruitment
into the trial commenced in earnest in January 2019 and
was progressing well until the emergence of COVID-19.
Impact of COVID-19 on SG015 programme
COVID-19 made it difficult to dose COPD patients in trial units
without potentially exposing vulnerable patients and research staff
to SARS-CoV-2. Hence in March 2020 the trial was paused (now
stopped), with 109 out of the targeted 120 patients recruited.
MHRA approval was then received to run an interim analysis on
the grounds that the data from COPD patients with confirmed
viral infection could generate useful safety, biomarker and efficacy
data to support ongoing trials of SNG001 in COVID-19 patients.
Results of interim analysis of SG015 trial in COPD patients
On 8 September 2020, Synairgen announced a positive interim
analysis of SNG001 in COPD patients, supporting progression of
SNG001 in COVID-19. Key findings included:
• SNG001 was well tolerated during the treatment period in a study
population that was elderly (mean age 66 years) and suffering
from reduced respiratory function, as measured by forced
expiratory volume in one second (FEV1) (59% of predicted value).
• The percentage of on-treatment adverse events was similar in
the placebo and SNG001 treatment groups (48.1% versus 45.6%,
respectively), with treatment-related adverse events being more
frequent in the placebo group (25%) compared to the SNG001
group (15.8%).
• Over the treatment period, lung antiviral responses to
viral infection were significantly enhanced in patients
receiving SNG001 compared to those on placebo, as
assessed by measuring increases in the gene expression
of interferon beta-dependent antiviral biomarkers MX1
(p=<0.001) and OAS1 (p=<0.001) in lung (sputum) cells.
• The impact of viral infection on COPD patients in the trial was
most evident on peak expiratory flow rate (PEFR), a measure of
lung function, and patient-reported symptoms assessed using
the Breathlessness Cough and Sputum Score (BCSS), and was
particularly apparent in exacerbating patients (i.e. patients
already requiring treatment with oral corticosteroids and/or
antibiotics at the time of randomisation, who represented one
third of patients enrolled).
• Exacerbating patients who received SNG001 had significantly
better lung function during the treatment period (difference in
change from baseline morning PEFR between patients receiving
SNG001 and placebo over days 2-15 was 25.5L/min; p=0.041).
• Although there was no significant difference in total BCSS in
this group over the treatment period, there was a trend for
the breathlessness component of the score in exacerbating
patients, suggesting that these patients may have recovered
more rapidly if they received SNG001 rather than placebo.
• Viral infections had less impact on non-exacerbating
patients and there were no significant treatment effects.
The trial data is supportive of not only the near term COVID-19
development activity, but also the longer term aim to use SNG001
to treat patients admitted to hospital with severe viral lung
infections. COPD patients represent one of the largest groups
of patients in this setting.
LOXL2
Pharmaxis, the Company’s Australian-based partner for the
antifibrotic LOXL2 inhibitor programme, updated the market post
period-end on 30 April 20216 to state it is currently pursuing a
number of different options to enable PXS-5382 to enter the clinic
in Phase II trials in a chronic kidney disease. Pharmaxis also states
that it continues to have discussions with potential partners and
independent investigators in relation to study protocol design
and funding options including grants. In the event of a qualifying
licensing agreement or other commercialisation of the product,
Synairgen is entitled to receive circa 17% of Pharmaxis’ licence
receipts/royalties, net of allowable expenses and we have no
ongoing financial obligations to the programme.
Intellectual Property
Patent filings
Adding to the Company’s IP portfolio, patent applications were
filed following (i) the results from the study for the use of inhaled
IFN-beta in COVID-19 patients and (ii) the interim analysis of
the data from the trial that used inhaled IFN-beta to treat virus-
induced exacerbations in COPD patients undergoing treatment
with systemic corticosteroids. Further updates regarding pending
patents will be provided in due course.
Addition to the management team
Richard Hennings joined Synairgen as Chief Commercial Officer
in March 2021. Between 1999 and 2017 he held Commercial
leadership roles at Gilead Sciences, Novartis and AstraZeneca.
During his eight-year Gilead tenure, Richard led the expansion
of respiratory and anti-viral portfolios in the EU and US markets,
launching inhaled Cayston® for Cystic Fibrosis and HIV treatment
Stribild®. During his subsequent AstraZeneca assignment,
Richard led Antibiotic Zavicefta® EU/ LATAM launch readiness and
divestment of the antibiotics business unit to Pfizer. Between 2017
and 2020 Richard was VP & Commercial Head of Verona Pharma.
Key Performance Indicators (KPIs)
The Board considers that the most important KPIs are non-
financial and relate to the progress of the clinical programmes and
the scale up of SNG001 manufacturing, which are discussed in the
preceding sections of this report.
The most important financial KPIs are the planned expenditure
on COVID-19 related clinical trials and manufacturing scale-up
and the cash position of the Group. The actual expenditure on
the COVID-19 activities was below budget and the closing cash
position was ahead of budget. These are further described in the
financial review below.
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 37 to 52. The consolidated financial statements are
prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006.
The financial statements of the Company, set out on pages 53 to
57, are prepared in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework.
Statement of Comprehensive Income
The loss from operations for the year ended 31 December 2020
was £17.74 million (2019: £4.82 million) with research and
development expenditure amounting to £15.50 million
(2019: £3.46 million) and other administrative expenses
£2.25 million (2019: £1.36 million).
During 2019 our research and development activities were solely
focussed on the Phase II trial in COPD patients. During 2020 we
continued to work on the COPD trial until it was halted on account
of COVID-19. However, the majority of the £12.0 million year-
on-year increase in research and development expenditure is
attributable to our COVID-19 clinical trials and manufacturing
scale-up activities.
Clinical trial expenditure was initially focussed on the SG016
hospital and home Phase II trial activities. This was followed by
preparatory activities for the international SG018 Phase III trial in
hospitalised patients and finally for participation in the ACTIV-2
study, where we have provided study product for the trial. The
clinical trial preparatory and execution activities necessitated a
very significant scale up of our clinical trial infrastructure and this
resulted in a much greater use of outsourced experts.
Significant investment was made into manufacturing scale-
up. Two batches of active and placebo pre-filled syringes were
manufactured to meet clinical trial requirements. Process
Performance Qualification (PPQ) preparation activities (in advance
of commercialisation) were commenced at both a new drug
substance manufacturer and at a new drug product manufacturer,
with the latter involving both pre-filled syringes and blow-fill-seal
ampoules. The Company’s advisory base in both regulatory and
CMC activities was also significantly expanded.
Other administrative expenses increased from £1.36 million to
£2.25 million. The increase was attributable to higher personnel
costs, as we scaled up to handle greater volumes of transactions,
higher investor relations activity costs, and the costs of hedging
an element of our future foreign exchange exposures on
manufacturing costs denominated in US dollars and Euros.
Despite the significant increases in cash on hand after the two
fundraisings during the year, finance income reduced on account of
the reduction in interest rates during the period. Finance expense
relates to interest expense on lease liabilities and the increase
reflects the first full year of interest expense, due to the lease
signed in mid-2019 being the first to be accounted under IFRS 16.
The research and development tax credit increased from
£0.91 million to £3.82 million on account of the increased
qualifying expenditure. The credit equates to 25% of our 2020
research and development expenditure (2019: 26%).
The loss after tax for 2020 was £13.92 million (2019: £3.89 million)
and the basic loss per share was 9.46p (2019: basic loss per
share of 3.55p).
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Strategic Report
(continued)
Fundraisings
During 2020, two fundraisings were conducted to fund our
ongoing COVID-19 clinical and manufacturing activities.
• Share issue proceeds (net of costs): £97.89 million (2019: £nil);
• Net settlement of options £1.29 million (2019: £nil); and
• Lease payments: £0.21 million (2019: £nil).
The first of these, conducted in March 2020, raised £14 million
(before expenses) by the issue of 40 million ordinary shares at
a price of 35p per share to fund: COVID-19 clinical trial activity;
manufacturing of SNG001 drug product and other supply
chain considerations; and strengthen the balance sheet.
The second fundraising took place in October 2020 and raised
£87.07 million (before expenses) by the issue of 49.75 million
ordinary shares at a price of 175p per share. 45.71 million shares
were issued pursuant to an institutional placing and 4.04 million
shares on account of a fully subscribed Open Offer. The proceeds
were raised to fund: the Phase III trial in COVID-19 patients;
SNG001 manufacturing and device scale-up activities; the
generation of further data to support SNG001 clinical development,
manufacturing processes and regulatory activities; strengthening
the balance sheet; and the net settlement of option costs.
Statement of Changes in Equity
In addition to the net proceeds from the share issues, the
recognition of share-based payments and the loss after taxation,
a charge of £1.29 million was taken to reserves in respect of net
settled options for the year ended 31 December 2020 (2019:
£nil). At the time of the second fundraising, two of the executive
directors exercised options over some 1,176,334 ordinary shares.
The Company net settled by paying the income tax and NICs
on the option holders’ behalf and issuing 534,172 new ordinary
shares. The cost of the income tax and NICs paid by the Company
amounted to £1.29 million and, in accordance with IFRS 2, was
charged directly to reserves as it equated to the fair value of the
number of shares withheld by the Company.
Statement of Financial Position
and Cash Flows
At 31 December 2020, net assets amounted to £85.14 million
(2019: £2.25 million), including cash balances of £74.98 million
(2019: £2.45 million).
The principal elements of the £72.53 million increase during the
year ended 31 December 2020 (2019: £2.88 million decrease) in
cash balances were:
• Cash used in operations: £24.73 million (2019: £3.73 million);
• Research and development tax credits received: £0.91 million
(2019: £0.84 million);
The other significant changes in the statement of financial
position were:
• Current tax receivable increased from £0.87 million to
£3.77 million on account of the higher research and
development tax credit;
• Trade and other receivables increased from £0.14 million to
£9.37 million. Prepayments and accrued income increased
from £0.10 million to £8.82 million on account of manufacturing
and clinical trial prepayments. VAT recoverable increased from
£0.04 million to £0.55 million on account of higher transactional
values; and
• Trade and other payables increased from £1.49 million to
£3.28 million, reflecting the increased level of activity.
Section 172 statement
In accordance with section 172(1) ((a) through (f)) of the
Companies Act 2006, the directors have acted, both
individually and collectively, in a way that would be most likely
to promote the success of the Company for the benefit of its
members as a whole. The directors have regard (amongst
other matters) to the:
a)
likely consequences of any decision in the long-term;
b)
interests of the Company’s employees;
c) need to foster the Company’s business relationships with
suppliers, customers and others;
d) impact of the Company’s operations on the community
and the environment;
e) desirability of the Company maintaining a reputation for
high standards of business conduct; and
f) need to act fairly between members of the Company.
The following table, in combination with the Corporate
Governance Statement set out on pages 19 to 22 and the
Company’s website (www.synairgen.com), sets out the
framework of our engagement with key stakeholder groups.
Our stakeholders
Material topics
How we engage
Investors
The Group continues to consume cash resources
and remains dependent upon securing funding
through share issues. It is therefore critical that
we have shareholders who will continue to invest
in the Company over the longer term.
• Business strategy
• Operational performance
• Financial performance and
cash requirements
• Corporate Governance
• RNS announcements
• Website updates
• Meetings after preliminary statement release
and interims for institutional investors
• AGM
• Proactive investor interview
Employees
Synairgen has 22 employees (including executive
directors) who are multi-skilled and many of them
have worked for the Group for many years. They all
play a key role in the business and it is vital that they
all understand and support the key decisions taken
in the running of the business.
• Operational targets
and progress
• Regular full company meetings and
a policy of open disclosure
• Opportunities to share ideas
• Financial resources of the Group
• Share price
• Working time flexibility
• Team meetings
• Open door policy to executive directors
• Structured appraisal process
• Use of share-based incentives for employees
University of Southampton
Synairgen is a spin-out company from the University
and still maintains many links with it, which benefit
both parties. The University is Synairgen’s landlord
and certain intellectual property is licensed from it.
• Operating facilities
• Intellectual property
• Joint projects
• Published papers
• Meetings with Founders
• Interaction on projects with scientists
and clinicians
Suppliers
We have a number of key long-term suppliers who
play an important part in our development pro-
grammes and it is important that we understand
their product/service development plans and they
understand our needs.
Customers (licensees)
Our customers are the large pharmaceutical and
biotech companies who have the resources and
infrastructure to take our products to market. It is
therefore critical that we continue to interact with
these companies at an early stage to make sure
we are developing a product which they may wish
to license.
Community
We aim to develop therapeutics which
pharmaceutical companies can sell to the
community and which governments will buy for
stockpiling and it is therefore critical that there is an
identified market need in the community.
• Supplier product
development plans
• Our clinical trial and longer-term
development needs
• Regular project meetings
• Programme development plans,
including clinical trial designs
• Regular meetings at key respiratory
conferences (ATS, ERS)
• Clinical trial read-outs
• In-house and external
competing products
• New therapeutics development
• Involvement in clinical trials
• Interactions with clinicians
• Patient data from clinical trials
Regulators
We work in a highly regulated sector and it is
critical that we maintain full compliance with
all appropriate regulations.
• Clinical trial approvals
• Regulatory compliance
• Use of external consultants to make
sure we are complying with regulations
• Interactions with Ethics Committees, MHRA,
FDA, EMA and other regulatory agencies
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Strategic Report
(continued)
Principal decisions in 2020
We have considered the decisions taken by the Board which
will have an impact on the longer-term performance and
prospects for the Company. The Board believes that five key
decisions taken during the year fall into this category and were
made with full consideration of both internal and external
stakeholders.
• The decision to undertake the SG016 clinical trial in
hospitalised and home-based COVID-19 patients and
raise £14 million (before expenses).
• The decision to raise £87 million (before expenses)
to undertake a Phase III trial in hospitalised COVID-19
patients and to scale up manufacturing capacity.
• The decision to source a new drug substance manufacturer
for SNG001 and to scale up manufacture of drug substance
and drug product prior to any marketing authorisation
being received.
• The decision in respect of primary and secondary
endpoints to be measured in the Phase III clinical trial.
• The decision to proceed with a twin track strategy of
progressing both pre-filled glass syringe and blow fill
seal technologies for the ‘Fill and Finish’ element of drug
product manufacturing.
Principal risks and uncertainties
In addition to the fact that the Group has one lead candidate
(SNG001), albeit with a number of indications, and is therefore
dependent on there being a successful outcome to its
development, the Board considers that the principal risks and
uncertainties facing the Group may be summarised as follows:
• Pre-clinical testing and/or clinical trials fail to
generate positive data
There is a high failure rate in the development of
pharmaceuticals and there is a substantial risk of adverse,
undesirable, unintended or inconclusive results from pre-
clinical testing or clinical trials, which may substantially
delay, halt entirely or make uneconomic any further
development of SNG001 (whether in the indication
of COVID-19 or in others) and may prevent or limit its
commercial use.
• Clinical trials overrun
There are a number of factors which may lead to delays,
including but not limited to: (i) delays to regulatory
approvals; (ii) variations in labelling and other regulatory
requirements between countries; (iii) dealing with protocol
changes; (iv) difficulty in finding suitable sites and patients;
and (v) incidence of COVID-19 declining or resolving.
If any of the above circumstances or events occur, then
delays may impact the Phase III timetable, which in turn may
also have cost and/or ultimately commercial implications.
To mitigate this risk, the Group monitors the prevalence of
COVID-19 on a country-by-country basis and has regular
meetings with its outsourced Clinical Research Organisation
(CRO) to expedite the set up and execution of the trial on a
local level.
• The regulatory approval processes of the MHRA, EMA, FDA
and other comparable regulatory agencies may be lengthy,
time-consuming and unpredictable
The Group’s future success is dependent upon its ability
to develop successfully, obtain regulatory approval for and
then successfully commercialise SNG001. Even if SNG001
is successful in clinical trials, there can be no assurance it
will receive regulatory approval at all or in a timely manner.
A drug which has received approval in one territory may
not succeed in getting approval in other territories and
regulators in different jurisdictions may seek different
criteria and endpoints in order for regulatory approval
and marketing authorisations to be granted. In the event
of COVID-19 resolving, regulators may take a different
approach to regulatory approval for any new therapeutics,
which may increase the regulatory burden on the Group
and have both time and cost implications.
The Group takes the advice of specialist regulatory advisers
and maintains an on-going dialogue with regulators.
• Coverage and reimbursement
Significant uncertainty exists as to the coverage and
reimbursement status of any pharmaceutical or biological
products for which the Group may obtain regulatory
approval. In the United States and other countries, patients
who are prescribed treatments for their conditions and
providers performing the prescribed services generally
rely on third-party payors to reimburse all or part of the
associated healthcare costs. Patients are unlikely to use
the Group’s products unless coverage is provided and
reimbursement is adequate to cover a significant portion of
the cost of our products. Sales of any products for which the
Group receives regulatory approval for commercial sale will
therefore depend, in part, on the availability of coverage and
adequate reimbursement from third-party payors. Third-
party payors include government authorities, managed care
plans, private health insurers and other organisations.
• There are a number of competing COVID-19 therapeutics
at different stages of regulatory approval
There are a number of competing therapeutics for COVID-19
at varying stages of regulatory approval, which may be
brought to market more quickly than SNG001 or prove
to be more effective, desirable or cheaper. Many of the
Group’s competitors have substantially greater financial and
other resources. There can therefore be no assurance that
competitors will not succeed in developing products which
would render SNG001 non-competitive or obsolete.
• Synairgen is dependent on a small team of key personnel
and scientific and clinical collaborators
The Group’s success is highly dependent on the expertise
and experience of a small team of key personnel and
scientific and clinical advisers/contractors. Whilst
the Group has entered into employment and other
agreements with each of these key personnel, the
retention of such personnel cannot be guaranteed.
Should key personnel leave or no longer be party to
agreements or collaborations with the Group, the
Group’s business prospects, financial condition and/
or results of operations could be adversely affected.
To mitigate this risk, the Group has contracted with
certain key partners to provide services to the Group,
including CRO services, regulatory affairs consultants,
CMC consultants and clinical management services. In
the event of positive Phase III trial results, it is likely that
the Group will have to consider partnering with other
organisations in order to scale up its operations particularly
in respect of marketing and distribution activities. There
can be no guarantee that the Group will find suitable
partners or on commercially advantageous terms.
• Manufacturing complexity
SNG001 is a biological product with inherent batch to batch
variation. Manufacturing issues could substantially increase
our costs and limit supply of SNG001 for clinical trials and
commercial sales.
• The Group is dependent on third party supply,
manufacturing and clinical service relationships
In common with other drug developers of similar size,
the Group engages the expertise and resources of third
parties in a number of key areas including: (i) the conduct
of clinical trials (Parexel); (ii) the manufacture, scale-
up, fill/finish and supply of SNG001 (Rentschler, Akron
Biotechnology and Catalent); and (iii) the manufacture and
supply of the nebuliser (Aerogen). Critical and complex
aspects of the Group’s business, some of which are
being scaled up for the first time and progressed to meet
accelerated timelines as a result of COVID-19, are therefore
in the hands of third parties over whom the Group has
limited control. The Group cannot guarantee that those
third parties or their suppliers (including suppliers of raw
materials and components necessary for manufacturing
activities) will be able to perform their contractual and
regulatory obligations satisfactorily or on time.
Default, delay, non-compliance with law and regulation
or other sub-optimal performance by a third party
may adversely affect the Company’s ability to carry out
the Phase III trial and/or deliver production in a timely
and cost-effective manner, which would adversely
affect the Group’s business plans and prospects.
Regulatory requirements for pharmaceutical products
tend to make the substitution of counterparties
costly and time-consuming. Alternative suppliers
may not be able to manufacture products effectively,
on time or obtain the necessary manufacturing
licences from applicable regulatory authorities.
The Group seeks to minimise risk by holding regular
meetings with key suppliers and the use of project
managers and other consultants to manage the
relationships. Where possible the Group tries to
have more than one supply route – for example
it is pursuing both pre-filled syringes and blow fill
seal technology for the finished dosage form.
• Intellectual property
The commercial success of the Group depends on its
ability to obtain patent and other protection for its
pharmaceutical discoveries in the US, Europe and elsewhere
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 products. Litigation
may be necessary to protect the Group’s intellectual
property, which may result in substantial costs.
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Strategic Report
(continued)
Synairgen’s
Founders
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.
• 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 funding
through the injection of equity capital. The Group may not
be able to generate positive net cash flows in the future or
attract such additional funding required on suitable terms,
or at the time it is needed. In such circumstances, the
Group’s 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.
• Cyber attack or IT systems failure
The Group is at risk of cyber attack or IT systems failure to
it or its key suppliers, which would cause operational harm,
including potential theft or loss of data.
The Group seeks to minimise this risk by retaining the
services of external IT advisers and pursuing suitable back-
up and security policies.
Outlook
Trial readouts are due over the coming months which we
anticipate will add to the growing body of evidence supporting
the use of inhaled interferon beta as a potential treatment
for patients with COVID-19. These include data from our
international SG018 Phase III trial and the US ACTIV-2 Phase
II trial in COVID-19 outpatients, with initial data for SG018
expected in H2 2021. Beyond these trials Synairgen is in
regular dialogue with government bodies and companies
regarding the progress of inhaled interferon beta and its
application as an effective treatment in both hospitalised
and home-based patients.
In the second half of 2021 Synairgen will continue its
commercialisation and manufacturing plans in order to scale
up manufacturing and supply capacity, with the aim of making
the drug readily available internationally and to meet potential
commercial demand in the event of a regulatory approval.
On behalf of the Board.
Richard Marsden
Chief Executive Officer
11 May 2021
References
1. Lancet Infect Dis. 2017 Nov;17(11):1133 1161. doi : 10.1016/S1473 3099(17)30396 1. Epub 2017 Aug 23
2. Clin Microbiol Infect. 2018 Nov; 24(11):1158-1163. Doi: 10.1016/j.cmi.2018.02.004. Epub 2018 Feb 12.
3. Adeloye D et al. Global and regional estimates of COPD prevalence: Systematic review and meta-analysis. J Glob Health. 2015 Dec; 5(2): 020415
4. https://www.who.int/news-room/fact-sheets/detail/the-top-10-causes-of-death
5. Department of Health. An Outcomes Strategy for Chronic Obstructive Pulmonary Disease (COPD) and Asthma in England. Published July 2011
6. https://www.pharmaxis.com.au/investor-centre/news/view/shareholder-update-march-2021
Prof. Sir 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
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’). 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
non-executive director for Allecra
Therapeutics GmbH and for
Aurealis Pharma AG.
Richard Marsden
Chief Executive Officer
John Ward
Chief Financial Officer
Dr Bruce Campbell
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 was 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 and was appointed
Chief Financial Officer in
March 2021. 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.
Bruce Campbell joined Synairgen
as a non-executive director in
April 2006. He has 50 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
BenevolentAI and Syncona.
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.
Prof. Sir 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 1,300 papers in
peer-reviewed literature. He is
Member of the Horizon 2020
Science Panel for Health; Board
Chair of the National Centre for
the Replacement, Refinement and
Reduction of Animals in Research
(NC3Rs); Trustee and Chair of the
Research Strategy Committee of
Cancer Research UK; Trustee and
Chair of the Grants Panel of the
Great Ormond Street Hospital
Children’s Charity; Trustee and
Chair of The Kennedy Trust
for Rheumatology Research;
Member of the Governing
Body of the Nuffield Council for
Bioethics; and Member of the
Natural Environment Research
Council. He serves on a number
of Advisory Committees in
industry, including scientific
board member or advisor to a
number of companies involved
in developing new treatments
for airways diseases.
Simon Shaw
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Dr Bruce Campbell
Prof. Sir Stephen Holgate CBE
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Corporate Governance Statement
The Board of directors of the Company (the “Board”) is
accountable to the Company’s shareholders for good corporate
governance and it is the objective of the Board to attain and
maintain a high standard of corporate governance. As Chairman,
it is my primary responsibility to lead the Board effectively and
to oversee the adoption, delivery and communication of the
Company’s corporate governance model.
In September 2018, the Board adopted the Quoted Companies
Alliance Corporate Governance Code (“QCA Code”). On our
website (www.synairgen.com/investors/corporate-governance-
statement/) we set out how we seek to comply with the
10 principles of the QCA Code. The following sections of the
Corporate Governance Statement explain how the QCA Code
is applied by the Company.
During 2021 we undertook a formal Board performance review,
building on the initial formal review conducted in 2019.
Board of Directors
On 31 December 2020, the Board consisted of myself, as the non-
executive Chairman, three executive directors (Richard Marsden,
Dr Phillip Monk and John Ward), and three non-executive directors
(Iain Buchanan, Dr Bruce Campbell and Prof. Sir Stephen Holgate).
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.
Brief curriculum vitae details about the directors are given on
pages 17 and 18. The key experience, skills, qualities and
capabilities that each director brings to the Board are
summarised below:
Simon Shaw
Simon is an experienced public company director, having fulfilled
both the roles of Chief Financial Officer and Chief Operating Officer
for listed companies. He has life science company experience and
in addition to his skills as a Chairman contributes strong financial
and corporate finance skills. As an executive director of a FTSE
250 company he keeps his skill set in these areas up to date.
Richard Marsden
Richard has worked in several roles within the life sciences
sector and has experience of sales and marketing, clinical
trials, project management, business development and
general management. He is actively involved in the design
and management of clinical trials and leads the Company’s
business development activities. He maintains and develops
his skill set in these areas by regular interaction with the
Company’s expert advisers and key opinion leaders (KoLs).
Dr Phillip Monk
Phillip is a leading scientist in respiratory biology, with experience
of managing teams of scientists and taking drugs through pre-
clinical and early clinical trials. His particular contribution to
the Board is championing the identification and management
of new opportunities up to the clinical stage, and maximising
value from clinical trials, particularly with reference to biomarker
and statistical analysis. Phillip regularly interacts with expert
advisers/KoLs and attends key relevant medical conferences.
John Ward
John is a Chartered Accountant who has worked for more than
20 years as Finance Director and Company Secretary in the life
sciences sector, with experience gained in private and quoted
companies. From his time at Price Waterhouse he also has
corporate finance experience. He keeps his skill set up to date
by attending appropriate courses run by accountancy firms and
the ICAEW.
Iain Buchanan
Iain has 40 years’ management experience in the pharmaceutical
and biotech sector. Iain keeps his skill set up to date through
his involvement with several other life sciences boards.
Dr Bruce Campbell
Bruce has 50 years’ drug development experience. He has
particular expertise in pre-clinical development. Bruce keeps his
skill set up to date through his involvement with several other
life sciences companies either as a director or consultant.
Prof. Sir Stephen Holgate
Stephen is a leading academic in respiratory medicine, combining
an outstanding knowledge of base and clinical science. He has
experience of working with many pharmaceutical companies
and guides the Board on developments in the respiratory sector.
Stephen keeps up to date through his ongoing involvement with
many industry and government-related organisations as an advisor.
All seven members of the Board bring relevant sector experience
in life sciences. Four members of the Board have capital markets
experience from other companies. The Board has expertise in
the following key areas: capital markets; discovery and pre-clinical
respiratory projects; clinical development; business development/
licensing and finance. The Board believes that its blend of relevant
experience, skills and personal qualities and capabilities is sufficient
to enable it to successfully execute the current phase of its strategy.
However, in due course as the business evolves, the Board
would seek to further enhance its experience in certain areas.
The Board is still composed solely of males and recognises this
gender imbalance. Over ensuing periods, the Board will look to
enhance its composition appropriately.
On 18 January 2021, Simon Holden was appointed as Company
Secretary, fulfilling the role previously carried out by John
Ward. Simon is a corporate lawyer by background and fulfils
the role of secretary for several other quoted companies, on
both the Main Market and AIM. The Company Secretary
reports directly to the Chairman on governance matters.
Non-executive directors are required to attend six scheduled
bi-monthly Board meetings (Scheduled Board meetings)
and committee or Scientific Advisory Board meetings. Non-
executive directors are required to be available at other
times as required for face-to-face and telephone meetings
with the executive team. All members of the executive
team work for the Company on a full-time basis and have
no non-executive directorships with other companies.
The Board notes that its directors have been in post for more
than nine years but considers that they remain functionally
independent, in that they remain fully committed to promoting
the success of the Company for the benefit of shareholders
as a whole. It is anticipated that enhancements to Board
composition over the coming periods will result in greater
QCA Code compliance in respect of director independence.
The Board also notes that one of its non-executive directors
was granted options in 2010, which lapsed in 2020. The practice
of granting non-executive directors options has now ceased.
With effect from the 2019 AGM and on an on-going basis, the
Board puts all directors up for re-election on an annual basis to
enable shareholders to confirm their support for the directors
and that, in the case of the non-executives, they are considered
by shareholders as remaining functionally independent.
The Company does not have a Senior Independent Director
and we believe that this is appropriate at this stage of the
Company’s development.
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.
Scheduled Board meetings take place throughout the year and the
Board also meets on any other occasions it considers necessary.
During the year ended 31 December 2020, the Board met six times
for Scheduled Board meetings, with all members in attendance.
At each meeting there was an opportunity for non-executive
directors to discuss matters without executive directors present.
In addition, there were 13 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.
Board performance
A Board evaluation process led by the Chairman took place in
March 2021. All of the directors completed a questionnaire about
the effectiveness of the Board and the results were compiled on an
anonymous basis by the Company Secretary. The Board reviewed
the outcome of the questionnaire and noted that some of the
areas identified, such as succession planning, had not been feasible
to date. However, it was agreed to review Board composition over
the coming period including from the perspective of Diversity and
Inclusion. It was also agreed that given the significant developments
of the previous year and the speed with which the approach to
COVID-19 had to operate, there had been little time for the Board’s
annual strategy review. This too, will be held in the coming period.
Also, during March 2021, a review of the Chairman’s performance
over the last year was carried out by the completion of a
questionnaire by other Board members. It is intended that
this internal review will be carried out on an annual basis.
19 | Synairgen plc annual report and accounts 2020 | www.synairgen.com | LSE:SNG
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Corporate Governance Statement
(continued)
Board committees
As appropriate, the Board has delegated certain responsibilities
to Board committees.
During 2020, the committee met six times with all
members attending. The Directors’ Remuneration
Report is detailed on pages 23 to 27.
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, without affecting their
Audit Independence).
During 2020, the committee met three times with all members in
attendance. The Audit Committee Report is detailed on page 28.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee currently
comprises Iain Buchanan (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.
Scientific Advisory Board
The Company established a Scientific Advisory Board (“SAB”)
in 2016. 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 Sir Stephen Holgate, Donna Davies and
Ratko Djukanovic). Other external experts and Synairgen
employees attend meetings as required. Dr Bruce Campbell
is responsible for feeding back the outputs from the SAB to
the Board.
Business model and strategy
As detailed in the Strategic Report on page 5, Synairgen’s strategy
is to develop SNG001 as a broad-spectrum antiviral by conducting
a Phase III study and preparing for launch. The key challenges in
execution are set out in the section of the Strategic Report entitled
Principal risks and uncertainties.
Corporate culture
Synairgen is a biotechnology company focussed on developing new
respiratory therapies which will make a difference to people’s lives.
Our core values to achieve this are:
The Company maintains a summary risk register which is
reviewed by the Board on an annual basis. The principal risks
and uncertainties facing the Group, with mitigation strategies,
are set out in the Strategic Report on pages 13 to 15. Project risk
management is continually evaluated by weekly project meetings
and other management tools. IT risk is covered at bi-annual
meetings with external IT advisers. A Health and Safety report
is reviewed by the Board.
Simon Shaw
Chairman
11 May 2021
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 indicates the
level of proxies lodged on each resolution, after it has been
dealt with by a show of hands. Details of the proxies lodged
are also published on the Company’s website. Details of the
resolutions and explanations thereto are included with the notice,
including any special arrangements necessitated by COVID-19.
Internal control and risk management
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 mitigate, 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.
• Passion – to demonstrate a passion for delivering high
The main features of the internal control system are as follows:
quality service
• Professionalism – to demonstrate courtesy, honesty and
responsibility when dealing with individuals or others in the
business environment
• Collaboration – to work effectively and inclusively with individuals,
institutions, or other companies in the business environment
• Experience – to demonstrate knowledge and skills in the
business environment
• Approachability – to be accommodating, friendly and
transparent when working with others
These matters are reviewed annually during staff appraisals.
• 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;
• regular financial reforecasts;
• 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.
21 | Synairgen plc annual report and accounts 2020 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2020| 22
Directors’ Remuneration Report
In September 2018, the Company adopted the QCA Corporate
Governance Code which includes the requirement to prepare a
remuneration committee report. This report includes and complies
with the disclosure obligations of the AIM Rules.
2020 was a transformative year for the Group with considerable
progress on its drug pipeline including its SNG001 treatment for
COVID-19. The Group also raised some £101 million of new capital
and its share price rose over the year from 6p to 153p. Both the
executives and the wider workforce were critical to the delivery
of these exceptional results and, after many years of providing
modest fixed pay due to affordability constraints, the Remuneration
Committee reviewed pay both for the executives and the wider
workforce. For completeness, no staff were made redundant or
placed on furlough.
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 pages 21. The members of the Committee are Iain Buchanan
(Chairman), Dr Bruce Campbell and Simon Shaw.
The Committee, which is required to meet at least twice a year, met
six times during the year ended 31 December 2020 and considered
the pay of the executive directors and ensured it understood pay
arrangements more broadly across the Group. 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 9%
pension contribution (which has been frozen as explained in
this report) either to the executive director’s individual money
purchase scheme or, as a salary supplement after deducting an
amount to reflect employer’s NICs to ensure that the overall cost to
the employer is not increased and typical benefits including family
private health cover, permanent health and life assurance.
The previous salary and benefit review took effect
from 1 January 2020, at which point the executive
directors’ salaries were increased by 2% (in line with
or below the level awarded to staff generally).
During the year, a benchmarking exercise was undertaken across
the workforce. Salaries and benefits have therefore been reviewed
with effect from 1 January 2021, taking into account Group and
individual performance, external benchmark information and
internal relativities. As a consequence of the 2021 review, executive
director salaries were increased by 12%, which was consistent
with the level awarded to staff generally. Given the significant
accomplishments made in 2020, this award is considered merit-
based and modest when benchmarked against equivalently
sized companies, demonstrating that the Committee is being
conscious of the need to both show restraint and ensure that
colleagues are appropriately but not excessively paid in a sector
currently subject to intense skills shortages. It, therefore, plans
to keep all salaries and packages under review and may make an
interim award if it considers that to be necessary or appropriate.
1 January 2020 to
31 December 2020
From
1 January 2021
Salary per
annum (£000)
Maximum
bonus as a
% of salary
Salary per
annum
(£000)
Maximum
bonus as a
% of salary
Richard Marsden
Dr Phillip Monk
John Ward
194
140
151
100%
100%
100%
217
157
169
100%
100%
100%
Recognising the increased focus on pension provision, the
Committee decided that the level of pension provision should
be frozen with the current 9% contribution level only applying
to the pre-2021 salary levels. This will be reconsidered as part
of subsequent reviews. If the recipient takes cash in lieu of a
contribution to a registered pension, the amount payable is
reduced to ensure that the total cost to the employer (inclusive
of employers’ NICs) is not increased.
Executive directors are also rewarded for improvements in the
performance of the Group sustained over a period of years in
the form of LTIP awards granted on a discretionary basis by
the Committee.
Directors’ remuneration for the year ended 31 December 2020 is
set out on page 27 of this document.
(ii) Chairman and non-executive director remuneration
No changes have been made to the fees set out in last year’s
report which remain a fee payable to the Chairman of £45,000
per annum, a fee for the non-executive directors of £25,000 and
a fee of £5,000 will continue to be paid to non-executive directors
who chair either the Audit or Remuneration and Nomination
committees. The Chairman continues to waive his entitlement
to the fee for chairing the Audit Committee.
(iii) Annual bonus plan
The Company operates a discretionary bonus scheme for
executive directors for delivery of exceptional performance
against pre-set relevant corporate objectives, which are subject
to malus and clawback provisions within an overall cap of 100%
of salary. Given the exceptional achievements including the
conducting of the COVID-19 clinical trial, manufacturing scale up
activities and significant fundraisings, as reflected by the share
price increasing some twenty-five fold, the Committee awarded
the maximum opportunity of 100% of salary.
Bonuses in respect of 2020 will be paid in H1 2021.
(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 LTIP, 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 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.
As indicated in last year’s report, an LTIP award was made in
June 2020 during the six week period following the preliminary
announcement of the results for the year ended 31 December
2019, with each of Richard Marsden, Phillip Monk and John Ward
being granted awards over shares worth 100% of salary with
performance conditions as set out below.
The Committee intends to make a similar LTIP award (the 2021
award) during the six week period following the preliminary
announcement of the results for the year ended 31 December
2020, with each of Richard Marsden, Phillip Monk and John Ward
being granted awards over shares worth up to 100% of salary with
vesting and performance conditions similar to the 2020 LTIP award.
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. Each of the
executive directors has achieved this level.
All awards will lapse at the end of the applicable performance
period to the extent that the applicable performance 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.
23 | Synairgen plc annual report and accounts 2020 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2020| 24
Directors’ Remuneration Report
(continued)
Performance conditions for the 2018, 2019 and 2020 LTIP awards
The performance conditions for all three awards were the
same. The awards are subject to two conditions. Firstly, awards
will only vest to the extent that the percentage increase in the
total shareholder return (‘TSR’, being the return earned by a
shareholder over the performance period in terms of change in
the share price and assuming re-investment of any dividends in
more shares at the prevailing price on the relevant ex-dividend
date) of the Company over the three year performance period is
equal or greater than the percentage increase in the techMARK
mediscience™ index over the same period as follows:
TSR growth over the performance
period less percentage increase in the
techMARK mediscience™ index over the
same period
Less than 10%
10%
20%
30%
Performance between the steps
Vesting percentage
of total number of shares
subject to award
0%
25%
50%
100%
Pro-rata on a straight-line basis
Secondly, no award will vest unless the average annual growth in
the TSR of the Company over the performance period is equal to or
greater than RPI plus 2% or, for more than 75% of an award to vest,
annual average TSR must exceed RPI by at least 5% rather than 2%.
Post period-end, the 2018 LTIP award vested in full.
TSR Performance
The latest guidelines from the QCA encourage companies to
include a chart showing its TSR performance over the preceding
10 years relative to a recognised index. While the Company has
principally focused on the techMARK mediscience™ index, it does
not formally publish a TSR based index, so the AIM100 has been
used below.
0
1
0
2
r
e
b
m
e
c
e
D
1
3
t
a
0
0
1
o
t
d
e
s
a
b
e
r
,
n
r
u
t
e
R
s
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
700
600
500
400
300
200
100
0
31/12/2010
31/12/2011
31/12/2012
31/12/2013
31/12/2014
31/12/2015
31/12/2016
31/12/2017
31/12/2018
31/12/2019
31/12/2020
Synairgen AIM 100
Source: Thomson Reuters Datastream
(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. In
February 2021, Richard Marsden’s notice period was amended
from six months to twelve months from either party.
During the year ended 31 December 2020, the executive directors
did not hold any non-executive directorships with other companies.
The Chairman and non-executive directors have entered into
letters of appointment for an initial fixed period of twelve months,
which renew automatically for a further twelve month period on
the anniversary of commencement. The appointment can be
terminated on three months’ notice by either party.
Directors’ interests in share options
The interests of directors in share options over ordinary shares during the year were as follows:
Synairgen Long Term Incentive Plan
Date of grant
At 1 January 2020
Granted during
the year
Exercised during
the year
At 31 December
2020
Exercise
price
Earliest
exercise date
Expiry date
Richard Marsden
7 September 2009
8 September 2010
21 September 2011
5 April 2018
4 April 2019
18 June 2020
Dr Phillip Monk
21 September 2011
5 April 2018
4 April 2019
18 June 2020
John Ward
7 September 2009
8 September 2010
21 September 2011
5 April 2018
4 April 2019
18 June 2020
605,000
246,889
538,063
880,903
772,167
–
–
–
–
–
–
490,817
400,212
636,208
557,679
–
–
–
–
354,483
100,000
224,445
489,148
685,147
600,575
–
–
–
–
–
–
381,749
(605,000)
(246,889)
–
–
–
–
–
–
–
–
(100,000)
(224,445)
–
–
–
–
–
–
538,063
880,903
772,167
490,817
400,212
636,208
557,679
354,483
–
–
489,148
685,147
600,575
381,749
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
1p
7 Sept 2012
8 Sept 2013
31 Dec 20201
31 Dec 20201
21 Sept 2014
20 Sept 2021
5 April 2021
4 April 2022
4 April 2028
3 April 2029
18 June 2023
17 June 2030
21 Sept 2014
20 Sept 2021
5 April 2021
4 April 2022
4 April 2028
3 April 2029
18 June 2023
17 June 2030
7 Sept 2012
8 Sept 2013
31 Dec 20201
31 Dec 20201
21 Sept 2014
20 Sept 2021
5 April 2021
4 April 2022
4 April 2028
3 April 2029
18 June 2023
17 June 2030
Note 1. Awards normally lapse on the tenth anniversary of grant. Due to close period constraints, it was not feasible for the executives to exercise their 2009 and
2010 awards and the Committee agreed to extend the exercise window until the end of 2020.
Note 2. The Company issued (i) 40,000,000 new shares pursuant to a placing on 30 March 2020 and 15 April 2020 and (ii) 49,753,026 new shares pursuant to
a further placing on 19 October 2020 and 4 November 2020. While this would have permitted the Committee to adjust the shares subject to awards using the
HMRC established Theoretical Ex-Rights Price (TERPS) formulae (which would have increased the shares subject to awards by approximately a further one-third),
the Committee felt that this was not appropriate as the placing was offered on a non-pre-emptive basis.
Options over 1,176,334 shares granted under the LTIP were exercised during the year by Richard Marsden and John Ward. The Company
agreed to net-settle these options on behalf of Richard Marsden and John Ward. Under this process, the Company settled the relevant
options by delivering 534,172 ordinary shares (386,842 to Richard Marsden and 147,330 to John Ward), which represented the notional gain
on exercise with the income tax and National Insurance Contributions (NICs) due on such gain paid by the Company to HMRC on behalf of
Richard Marsden and John Ward. Richard Marsden and John Ward did not receive any cash proceeds from the exercise of these options.
Synairgen Qualifying Non-Employee Option Scheme
Date of grant
Iain Buchanan
28 June 2010
At 1 January 2020
Lapsed
during the year
At 31 December
2020
Exercise
price
Earliest
exercise date
Expiry date
212,765
(212,765)
–
23.5p
28 June 2013
27 June 2020
These awards were granted under a legacy plan. The exercise of the options awarded in June 2010 (which vested in 2013) is subject to the
rules of the scheme. The option granted to Mr Buchanan lapsed without being exercised on its 10th anniversary.
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 2020 was 153.0p. During the year then ended, the mid-market price
ranged from 5.875p to 247.52p. On 11 May 2021 the closing price was 102.2p.
25 | Synairgen plc annual report and accounts 2020 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2020| 26
Directors’ Remuneration Report
(continued)
Report of the Audit Committee
for the year ended 31 December 2020
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 2020 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 2020 and 2019 was as follows:
Notes
Salary/
fee
Bonus
Benefits
(iii)
Total (excl.
pension)
Pension
(iv)
Total (incl.
pension)
Total (excl.
pension)
Pension
Total (incl.
pension)
Year ended 31 December 2020
Year ended 31 December 2019
£000
Executive Directors
Richard Marsden
Dr Phillip Monk
John Ward
(i)
Non-executive Directors
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
(ii)
Prof. Sir Stephen Holgate
194
140
151
45
30
25
–
25
194
140
151
–
–
–
–
–
10
9
9
–
–
–
–
–
398
289
311
45
30
25
–
25
17
13
13
–
–
–
–
–
415
302
324
45
30
25
–
25
272
196
213
30
28
26
13
25
17
12
13
–
–
–
–
–
289
208
226
30
28
26
13
25
Total
610
485
28
1,123
43
1,166
803
42
845
(i) Richard Marsden was the highest paid director during the year ended 31 December 2020, earning a total of £415,000 as set out above. In addition,
he made a gain (before tax and NICs) on the exercise of 851,889 options amounting to £1,712,000 and Mr Ward made a gain of £652,000 on the exercise of
324,445 options. Richard Marsden was the highest paid director during the year ended 31 December 2019 and did not exercise any options during that year.
(ii) Paul Clegg retired as a non-executive director on 3 June 2019. He received no payment for loss of office.
(iii) The Committee approved that executive directors could carry forward a maximum of 10 days’ holiday pay into 2021 and that, owing to the exceptional nature
of 2020, the remaining element of unused holiday entitlement could be paid. The amounts payable in respect of Mr Marsden, Dr Monk and Mr Ward amounted
to £8,000, £8,000 and £6,000 and were paid in Q1 2021. These sums are included under Benefits in the table above.
(iv) 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 (the three executive directors), for the year ended 31 December 2020, the total share-based
payment amounted to £152,000 (2019: £85,000) and total social security costs were £134,000 (2019: £126,000).
On behalf of the Board
Iain Buchanan
Chairman of the Remuneration and Nomination Committee
11 May 2021
BDO, the Company’s auditors, were present at all meetings.
John Ward, the Group’s Chief Financial Officer, was present at all
meetings except for when his performance was being discussed by
the Committee.
Auditor independence
As set out in the Corporate Governance Statement on page 21, 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 for tax advice during the year (as detailed in
note 4 to the Financial Statements) amounted to £46,000. £9,000
of these fees relate to tax compliance services. The majority of
the remaining tax advice was for indirect tax advisory services in
relation to the Group’s overseas manufacturing and clinical trial
activities. Whilst the Committee notes that the non-audit fees are
in excess of the audit fees, it has confirmed that the amount of the
audit fees are not material to BDO or the audit partner concerned.
The Committee therefore considers that the amount of non-audit
fees does not impair the independence of BDO as auditor.
Internal audit function
The Group does not have an internal audit function,
but the Committee considers that this is appropriate,
given the size and relative lack of complexity of the
Group at this stage in its development. The Committee
keeps this matter under review annually.
Simon Shaw
Chairman of the Audit Committee
11 May 2021
Constitution and membership
The Audit Committee (the ‘Committee’) has primary responsibility
for ensuring that the financial performance of the Group
is properly measured and reported on. It was established
in October 2004 and its terms of reference are outlined
in the Corporate Governance Statement on page 21.
The members of the Committee during the year under review and
at the date of this report are 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.
Matters covered by the Committee
The Committee, which is required to meet at least twice a year,
met three times during the year ended 31 December 2020,
with all members attending all meetings, and covered the
following matters:
• May 2020: audit completion meeting for the 2019 year-
end audit including reviews of: the valuation model to
support Synairgen plc’s investment in Synairgen Research
Limited; the financial forecast to support the Group’s
ability to account on a going concern basis, including the
potential impact of COVID-19; the implementation of IFRS
16 accounting, the auditor’s report on the audit; and the
annual report.
• September 2020: interim report completion meeting for
2020, including agreement of scope and materiality and
reviews of: the financial forecast to support the Group’s
ability to account on a going concern basis; the report from
the Company’s auditors; and the interim statement.
• December 2020: planning meeting for the 2020 year-end
audit, including agreement of audit scope, materiality, areas
of audit focus, audit fees and auditor independence.
The Committee also met in March 2021 for the audit completion
meeting for the 2020 year-end audit including reviews of: the
support for Synairgen plc’s investment in Synairgen Research
Limited; the financial forecast to support the Group’s ability to
account on a going concern basis, the auditor’s report on the audit;
and the annual report.
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Directors’ Report
Statement of Directors’ responsibilities
in respect of the Annual Report and
the Financial Statements
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 2020.
The review of future developments is covered in the Outlook
section of the Strategic Report. Details of directors’ remuneration
and share options are given in the Directors’ Remuneration
Report.
Directors
The directors of the Company during the year ended
31 December 2020 were:
Executive directors:
Non-executive directors:
Richard Marsden (Chief Executive Officer)
Simon Shaw (Chairman)
Dr Phillip Monk (Chief Scientific Officer)
Iain Buchanan
John Ward (Finance Director)
Dr Bruce Campbell
Prof. Sir Stephen Holgate CBE
Directors’ interests in ordinary shares
The directors, who held office at 31 December 2020, had the
following interests in the ordinary shares of the Company:
Richard Marsden (i)
Dr Phillip Monk
John Ward
Simon Shaw (ii)
Iain Buchanan
Dr Bruce Campbell (iii)
Prof. Sir Stephen Holgate
At 31 December 2020
Number of shares
At 1 January 2020
Number of shares
754,667
244,600
514,907
1,531,239
112,741
322,830
886,931
310,682
230,314
339,006
1,474,096
112,741
294,259
858,360
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 year. Under that law the directors have elected
to prepare the Group financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and the Company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law
the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss
of the Group for that period. The directors are also required to
prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on AIM.
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
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and 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 Group and
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 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.
By order of the Board
Simon Holden
Company Secretary
11 May 2021
Research and development
During the year ended 31 December 2020, the Group
has invested £15,495,000 (2019: £3,460,000) in
research and development activities and a review of this
expenditure is included in the Strategic Report.
Going concern
The directors have prepared financial forecasts to estimate
the likely cash requirements of the Group over the next twelve
months, given its stage of development and lack of recurring
revenues. In preparing these financial forecasts, the directors
have made certain assumptions with regards to the timing
and amount of future expenditure over which they have
control. The directors have attempted to take a prudent view in
preparing these forecasts, recognising the inherent variability
in costs of the ongoing Phase III clinical trial of SNG001 in
COVID-19 patients and the manufacturing scale-up activities.
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.
Treasury policy and financial risk management
The Group’s treasury policy and financial risk management is set
out in note 16 to the financial statements on pages 49 and 50.
Dividends
The directors do not propose the payment of a dividend.
Substantial shareholdings
As at 11 May 2021, the Company had been advised of the
following shareholders with an interest of 3% or more in its
ordinary share capital:
Name of shareholder
Polar Capital LLP
Polygon Global Partners LLP
Number of
ordinary shares
% of share
capital
17,740,403
9,996,978
8.9%
5.0%
(i) Richard Marsden’s shareholding includes 184,821 shares held in his pension plan.
reasonable and prudent;
• state whether the Group financial statements have been
prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act
2006 and the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), 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.
(ii) Simon Shaw’s shareholding includes 105,516 shares held in his pension plan.
(iii) Dr Bruce Campbell’s shareholding includes 40,299 owned by his wife,
Susan Campbell.
(iv) Prof. Sir Stephen Holgate’s shareholding includes 1,923 shares owned by his wife,
Elizabeth Holgate.
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 to 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
Simon Holden
Company Secretary
11 May 2021
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Independent Auditor’s Report
to the members of Synairgen plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at
31 December 2020 and of the Group’s loss for the year
then ended;
• the Group financial statements have been properly prepared
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
• the Parent Company 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.
We have audited the financial statements of Synairgen plc (the
‘Parent Company’) and its subsidiary (the ‘Group’) for the year
ended 31 December 2020 which comprise the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Changes in Equity, Consolidated Statement of Financial Position,
Consolidated Statement of Cash Flows, Parent Company Balance
Sheet, Parent Company Statement of Changes in Equity and notes
to the Consolidated and Parent Company financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and international accounting standards in conformity with
the requirements of the Companies Act 2006. The financial
reporting framework that has been applied in the preparation
of the Parent Company financial statements is applicable law
and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and
the Parent Company’s ability to continue to adopt the going
concern basis of accounting included evaluating the following:
• The Directors’ method for assessing going concern
including the relevance and reliability of underlying data
used to make the assessment, and whether assumptions
and changes to assumptions from prior years are
appropriate and where relevant consistent with each
other. The assumptions were assessed against the Group’s
development plans and committed expenditure.
• The Directors’ plans for future actions in relation to
the going concern assessment including whether
such plans are feasible in the circumstances.
• The Directors’ stress-testing of the forecasts to the extent
of reasonable worst-case scenarios, solely in relation
to their estimates of planned operational costs.
• The adequacy and appropriateness of disclosures in the
financial statements regarding the going concern assessment.
We carried out the above procedures through using our
understanding of the business model, objectives, strategies
and related business risk, the measurement and review of
the entity’s financial performance, forecasting and budgeting
processes and the entity’s risk assessment process.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the entity’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage
Key audit
matters
100% (2019: 100%) of Group loss before tax
100% (2019: 100%) of Group total assets
2020
2019
Clinical trial accounting
Investment in subsidiary:
impairment review
✓
✗
✗
✓
Investment in subsidiary: impairment review is
no longer considered to be a key audit matter
because of the extent of headroom in recoverable
amount over carrying value, represented
by the Group’s AIM market capitalisation
at the reporting date, as all of the Group’s
intellectual property is held in this subsidiary
Materiality
Group financial statements as a whole
£900,000 (2019: £200,000) based on 5%
(2019: 5%) of the loss before tax
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed
the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors
that may have represented a risk of material misstatement.
The Group’s operations are based solely in Southampton,
United Kingdom.
Both components, Synairgen plc and Synairgen Research
Limited, are considered significant components and were
subject to full-scope audits by the group audit team.
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Independent Auditor’s Report
to the members of Synairgen plc
(continued)
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
Clinical trial accounting
The accounting policy in
respect of the accounting
for manufacturing activities
is included within the
Inventories accounting policy
on page 41; the accounting
policy in respect of research
and development activities is
included within the “Research
and development” accounting
policy on page 40; significant
balance sheet items in relation
to clinical trial activities are
included in notes 13 and 15.
Due to the nature of clinical trials,
drug manufacturing processes
and general research, it is often
difficult to estimate the length of
time a particular research process
is going to take. This is reinforced
by the fact that such activities are
often contracted to third parties.
As a result, it can be challenging for
the entity to measure what costs have
been incurred in relation to outsourced
research and manufacturing at a
particular point in time and as such,
based on billings received, whether
project accruals and prepayments
recorded are reasonably estimated.
Our audit risk is focused on whether
the relevant expenditure has been
appropriately included in the income
statement and whether prepayments
and accruals are appropriately
calculated and recognised.
How the scope of our audit
addressed the key audit matter
We have assessed the key terms of all material ongoing third party
research and drug manufacturing agreements to ensure that we
understood the nature of the goods or services to be provided, the
total contracted costs and, where relevant, milestone payments.
We then reviewed a sample of invoices raised in
accordance with the research and drug manufacturing
agreements and reviewed their content to determine the
correct accounting treatment and if the expenditure was
appropriately classified within the financial statements.
Where relevant, we have obtained third party confirmation
of stages of completion of a project and compared the
progress against both the contract and the value of
expenditure billed to date. We have then verified this to
the year-end cost position to determine whether related
prepayments or accruals are accurately recognised.
We verified the completeness of management’s calculation of
the accruals and prepayments position by selecting a sample
of significant purchase orders raised in the final quarter of the
year and checking that, based on evidence such as invoices
received and third party confirmations, the associated costs
had been recognised in the appropriate accounting period.
We also considered completeness of related accruals through
testing a sample of invoices recorded post year end checking
that, based on the terms of the service, they had been accounted
for correctly. In addition, we inspected board meeting minutes
for evidence of any significant contracts entered that might
require cost accruals that had not been recognised.
Key observations:
We consider the Group’s related accounting policies
have been appropriately applied, in the recording
of research and development expenditure, related
prepayments and accruals in the financial statements.
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of users that are
reasonably taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the
extent of testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as immaterial as
we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole
and performance materiality as follows:
Group financial
statements
Parent company
financial statements
2020
£’000
900
2019
£’000
200
2020
£’000
550
2019
£’000
180
60% of
Group
materiality
90% of
Group
materiality
Capped 60% (2019: 90%)
of Group materiality
given the assessment
of the components
aggregation risk.
5% of the loss
before tax
Loss before tax is
considered to be
one of the principal
considerations for
the users of the
financial statements
in assessing the
financial performance
of the Group.
675
150
415
135
75% of materiality based on a low expected
total value of known and likely misstatements.
Materiality
Basis for
determining
materiality
Rationale
for the
benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
Component materiality
Aside from the Parent company, there is only one additional
component – being the trading subsidiary Synairgen Research
Limited. The materiality for this component was set at
£800,000 (2019: £180,000), based on 90% (2019: 90%) of Group
materiality. In the audit of this component, we further applied
a performance materiality level of 75% of the component
materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £18,000 (2019: £4,000).
We also agreed to report differences below this threshold that,
in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the Annual
Report and Accounts other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Independent Auditor’s Report
to the members of Synairgen plc
(continued)
Other Companies Act 2006 reporting
Based on the responsibilities described below and our
work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report
on certain opinions and matters as described below.
Strategic
Report and
Directors’
Report
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the Strategic Report and
the Directors’ Report for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
• the Strategic Report and the Directors’
Report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding
of the Group and 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.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect of
the following matters in relation to which
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.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
responsibilities statement, the Directors are responsible for
the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either
intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
We focused on laws and regulations that could give
rise to a material misstatement in the Group financial
statements and the susceptibility of the entity’s financial
statements to material misstatement including fraud.
Our procedures included, but were not limited to:
• Evaluation of management incentives and opportunities
for fraudulent manipulation of the financial
statements including management override;
• This evaluation involved a particular focus on the judgements
and estimates inherent in the key audit matter and exercising
professional scepticism in considering the impact of those
estimates and judgements on the reported results and
key performance measures such as the loss before tax;
• The evaluation also involved gaining an understanding of
management remuneration schemes and the extent to
which remuneration is influenced by reported results;
• Discussions with Management and the Audit
Committee regarding known or suspected instances
of non-compliance with laws and regulations;
• Obtaining and understanding of controls designed
to prevent and detect irregularities;
• Review of board meeting minutes for any evidence of
fraud or non-compliance with laws and regulations
including health and safety; taxation regulations; and
drug development regulatory authorities and
• Assessment of journal entries to accounts that
are considered to carry a greater risk of fraud
as part of our planned audit approach.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members
and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through collusion. There
are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is
available on the Financial Reporting Council’s website
at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent
Company and the Parent Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Ian Oliver (Senior Statutory Auditor)
For and on behalf of
BDO LLP, Statutory Auditor
Reading, United Kingdom
11 May 2021
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 2020
Consolidated Statement of
Financial Position
as at 31 December 2020
Research and development expenditure
Other administrative expenses
Total administrative expenses and loss from operations
Finance income
Finance expense
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)
Year ended
31 December 2020
£000
Year ended
31 December 2019
£000
Notes
(15,495)
(2,246)
(17,741)
19
(10)
(17,732)
3,816
(13,916)
(3,460)
(1,357)
(4,817)
30
(6)
(4,793)
908
(3,885)
(9.46)p
(3.55)p
6
6
7
8
Consolidated Statement
of Changes in Equity
for the year ended 31 December 2020
Note
At 1 January 2019
Recognition of share-based payments
Loss and total comprehensive loss for the year
At 31 December 2019
Issue of ordinary shares
Transaction costs in respect of share issues
Recognition of share-based payments
Net settlement of share options
Loss and total comprehensive loss for the year
Share
capital
£000
18a
Share
premium
£000
Merger
reserve
£000
Retained
deficit
£000
Total
£000
18b
18c
18d
1,094
28,262
483
(23,812)
6,027
–
–
–
–
–
–
111
111
(3,885)
(3,885)
1,094
28,262
483
(27,586)
2,253
905
100,170
–
–
–
–
(3,187)
–
–
–
–
–
–
–
–
–
–
101,075
(3,187)
207
207
(1,291)
(1,291)
(13,916)
(13,916)
At 31 December 2020
1,999
125,245
483
(42,586)
85,141
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Current assets
Inventories
Current tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Lease liabilities
Current liabilities
Trade and other payables
Lease Liabilities
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 2020
£000
31 December 2019
£000
9
10
11
12
13
14
11
15
11
17
17
18
18
44
250
94
388
41
3,771
9,372
74,976
88,160
88,548
16
301
255
572
41
865
139
2,454
3,499
4,071
–
(127)
(3,279)
(128)
(3,407)
(3,407)
85,141
1,999
125,245
483
(42,586)
85,141
(1,490)
(201)
(1,691)
(1,818)
2,253
1,094
28,262
483
(27,586)
2,253
The financial statements on pages 37 to 52 were approved and authorised for issue by the Board of directors on 11 May 2021 and signed
on its behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Chief Financial Officer
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Consolidated Statement of
Cash Flows
for the year ended 31 December 2020
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Year ended
31 December 2020
£000
Year ended
31 December 2019
£000
Notes
1. Accounting policies
Basis of preparation
The Group financial statements have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006.
(17,732)
(4,793)
The accounting policies adopted are consistent with those of the previous financial year.
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance income
Finance expense
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible fixed assets
Share-based payment charge
Cash flows from operations before changes in working capital
Decrease in inventories
(Increase)/Decrease in trade and other receivables
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 intangible assets
Purchase of property, plant and equipment
Decrease in other financial assets
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Transaction costs in respect of share issues
Net settlement of share options
Principal paid on lease liabilities
Interest paid on lease liabilities
Net cash generated from financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
(19)
10
90
161
9
207
(17,274)
–
(9,244)
1,789
(24,729)
910
(23,819)
31
(37)
(39)
–
(45)
101,075
(3,187)
(1,291)
(196)
(15)
96,386
72,522
2,454
74,976
(30)
6
83
67
13
111
(4,543)
15
81
713
(3,734)
838
(2,896)
26
–
(10)
50
66
–
–
–
–
–
–
(2,830)
5,284
2,454
Amendments to Existing Standards
With effect from 1 January 2020, the Group adopted two amendments to existing standards:
(i) Amendments to References to the Conceptual Framework in IFRS Standards
The revised Conceptual Framework introduces a number of new aspects including: concepts on measurement, including factors to be
considered when selecting a measurement basis; concepts on presentation and disclosure, including when to classify income and expenses in
other comprehensive income; and guidance on when assets and liabilities are removed from financial statements. It also updates the definitions
of asset and liability and the criteria for recognising assets and liabilities in financial statements. Finally, it has clarified the guidance on prudence,
stewardship, measurement uncertainty, and substance over form.
(ii) Amendments to IAS 1 and IAS 8 – Definition of Material
The amendments clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards themselves.
The adoption of these amendments has not had a material impact on the Group’s financial statements.
The Group financial statements are presented in Sterling.
Going concern
The directors have prepared financial forecasts to estimate the likely cash requirements of the Group over the next twelve months, given its stage of
development and lack of recurring revenues. In preparing these financial forecasts, the directors have made certain assumptions with regards to the
timing and amount of future expenditure over which they have control. The directors have attempted to take a prudent view in preparing these forecasts,
recognising the inherent variability in costs of the ongoing Phase III clinical trial of SNG001 in COVID-19 patients and the manufacturing scale up activities.
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.
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 57) made up to the reporting date. All intra-group transactions, balances, income and
expenses are eliminated on consolidation. The formation of the Group arose from merger accounting and as the business combination took place
prior to 1 July 2006, the date of transition to IFRS, the transaction has not been restated as permitted by IFRS 1 “First-time Adoption of International
Financial Reporting”.
Revenue
Revenue is stated net of value added tax.
The Group’s licensing and collaboration agreement with Pharmaxis in respect of the jointly developed LOXL2 inhibitors was renegotiated in
December 2017. No substantive performance obligations on the Group remained at 1 January 2019. Revenue from other amounts which may be
received in future under this agreement, will be recognised when a reliable estimate can be made, which is likely to be when the partner’s income
has been earned and the Group’s share is contractually due.
Revenue from the provision of services (which is not considered to be material in the current or prior year) is recognised over time, based on the
estimated stage of completion of the contracted work.
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.
Cash and cash equivalents at end of the year
14
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
1. Accounting policies (continued)
Financial liabilities
Employee benefits
All employee benefit costs, notably salaries, holiday pay, bonuses and contributions to personal defined contribution pension schemes are charged
to the consolidated statement of comprehensive income on an accruals basis.
Share-based payments
Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated
statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based
on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.
The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where vested share options are exercised by the participants but settled by the Company net of shares withheld to meet the participant’s tax and
NIC liabilities (‘net settlement’), the payment to meet such tax and NIC liabilities is treated as a deduction to equity to the extent that the payment
equates to the settlement date fair value of the shares withheld, and in the consolidated statement of cash flows is included within cash flows from
financing activities.
Intangible assets
Intangible assets are stated at cost less any accumulated amortisation and any accumulated impairment losses. Patent 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 of products approved for sale are stated at the lower of cost and net realisable value.
Raw materials inventory purchased and associated processing/manufacturing costs, related to therapeutics produced for clinical trial purposes or
commercial use ahead of regulatory approval, are expensed as incurred through research and development expenditure.
Where inventory manufacturers invoice in advance of the manufacturing activities, the invoice is recorded as a prepayment within trade and
other receivables.
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 financial assets held at amortised cost.
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types
of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. 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.
The Group’s financial assets measured at amortised cost 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, other short term highly liquid investments
with original maturities of three months or less.
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.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low value assets and leases with
a duration of twelve months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s
incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes: amounts expected to be payable under any residual value guarantee; the
exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise that option; and any penalties payable for
terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: lease
payments made at or before commencement of the lease; initial direct costs incurred; and the amount of any provision recognised where the
Group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are
reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the
remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
For contracts that both convey a right to the Group to use an identified asset and require services to be provided to the Group by the lessor, the
Group has elected to account for the entire contract as a lease, i.e. it does not allocate any amount of the contractual payments to, and account
separately for, any services provided by the supplier as part of the contract.
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 nor 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.
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 directors consider that the research and development tax credit recognised in respect of 2020, which amounts to £3.8 million
(2019: £0.9 million), is a critical accounting estimate on account of its size.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
3. Segmental analysis
Key management compensation
The Group operates in one area of activity, namely drug discovery and development. All assets of the Group are located within the United Kingdom,
with the exception of some manufacturing work in progress assets. All losses were generated in the United Kingdom.
4. Loss from operations
The loss from operations has been arrived at after charging:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Operating lease rentals payable (out of IFRS 16 scope):
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
2020
£000
90
161
9
–
–
2020
£000
25
16
7
9
37
94
2020
14
4
18
2020
£000
1,530
291
124
1,945
59
207
2,211
2019
£000
83
67
13
42
54
2019
£000
21
14
6
7
–
48
2019
11
3
14
2019
£000
1,293
164
105
1,562
(6)
111
1,667
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 Directors’ Remuneration Report on page 27,
which are ascribed as forming part of these financial statements.
6. Finance income and expense
Finance income represents bank interest receivable.
Finance expense represents interest expense on lease liabilities.
7. Taxation
Current tax
UK corporation tax credit on loss for the year
Adjustment in respect of prior years
Total income tax credit
2020
£000
(3,771)
(45)
(3,816)
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
19% (2019: 19%). 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 and development relief
Variable rates on tax losses surrendered for research and development tax credit
Movement in unrecognised losses and temporary differences
Adjustment in respect of previous years
Total tax credit for the current year
Deferred taxation
Changes in tax rates and factors affecting the future tax charge
2020
£000
(17,732)
(3,369)
(277)
39
(2,940)
1,170
1,606
(45)
(3,816)
2019
£000
(865)
(43)
(908)
2019
£000
(4,793)
(911)
–
21
(674)
269
430
(43)
(908)
The expected reduction in main UK corporation tax rate to 17% from 1 April 2020 enacted by the Finance Act 2016 was reversed in the Finance
Act 2020. Therefore, the UK statutory tax rate remains at 19% and the rate used to calculate any deferred tax balances at 31 December 2020 has
increased from 17% to 19%.
For the purpose of presentation in the consolidated statement of comprehensive income, remuneration costs of £1,116,000 (2019: £788,000) are
included in research and development expenditure and £1,095,000 (2019: £879,000) are included in other administrative expenses.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
7. Taxation (continued)
Recognised deferred taxation
Accelerated capital allowances
Other temporary differences
Trading losses
Charge for the year
Unrecognised deferred taxation
2020
£000
(3)
(18)
21
–
2019
£000
(12)
(2)
14
–
At 31 December 2020 the Group has trading losses carried forward which are available for offset against future profits of the Group amounting to
£24,254,000 (2019: £16,653,000) and non-trading losses of £2,847,000 (2019: £2,444,000). At 31 December 2020 the Group has an unrecognised
deferred tax asset in respect of these losses of £5,149,000 (2019: £3,247,000). 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 £8,921,000 (2019: £248,000)
and a deferred tax asset of £1,695,000 (2019: £42,000) thereon. The additional tax deduction will crystallise at the point the options are exercised.
As the utilisation of this additional deduction against taxable profits in the Group is uncertain, no deferred tax asset has been recognised in respect
of the future tax deduction on share options.
The movement on the unrecognised deferred tax asset comprises the following:
Unrecognised deferred tax asset at the start of the year
Change in tax rate
Movement in the year
Unrecognised deferred tax asset at the year-end
8. Loss per ordinary share
Loss attributable to ordinary equity holders of the parent company (£000)
Weighted average number of ordinary shares in issue (000)
Basic and diluted loss per share (pence)
2020
£000
(3,289)
(387)
(3,168)
(6,844)
2020
£000
(13,916)
147,120
(9.46)
2019
£000
(2,995)
–
(294)
(3,289)
2019
£000
(3,885)
109,433
(3.55)
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.
9. Intangible assets
Cost
At 1 January 2019 and 31 December 2019
Additions
At 31 December 2020
Amortisation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
At 1 January 2019
At 31 December 2020 £44,000 (31 December 2019: £16,000) of the net book amount relates to interferon beta patent costs.
10. Property, plant and equipment
Computer
equipment
£000
Laboratory and
clinical equipment
£000
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Depreciation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
At 1 January 2019
44
7
51
8
59
39
3
42
5
47
12
9
5
520
3
523
31
554
151
80
231
85
316
238
292
369
Patent costs
£000
212
37
249
183
13
196
9
205
44
16
29
Total
£000
564
10
574
39
613
190
83
273
90
363
250
301
374
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
11. Leases
12. Inventories
The Group has one lease with its landlord, the University of Southampton, which provides the Group with office space and
access to laboratory equipment. A new two-year lease was entered into with effect from 1 August 2019.
The lease liability has been measured at the present value of the contractual payments due to the lessor over the lease term
using a discount rate of 5%, which is an estimate of the discount rate applicable to a property lease.
Right-of-use assets
At 1 January 2019
Additions
Depreciation
At 31 December 2019
Depreciation
At 31 December 2020
Lease liabilities
At 1 January 2019
Additions
Interest expense related to lease liabilities
At 31 December 2019
Interest expense related to lease liabilities
Lease payments
At 31 December 2020
Lease liabilities
At 31 December 2020
At 31 December 2019
Analysis of lease expense
Depreciation of right-of-use assets
Land and buildings
Plant and machinery
Short term lease expense
Charge to operating loss
Interest expense related to lease liabilities
Charge to loss before taxation for leases
Land and
buildings
£000
Plant and
machinery
£000
–
161
(34)
127
(80)
47
–
161
(33)
128
(81)
47
Land and
buildings
£000
Plant and
machinery
£000
–
161
3
164
5
(105)
64
–
161
3
164
5
(105)
64
Total
£000
–
322
(67)
255
(161)
94
Total
£000
–
322
6
328
10
(210)
128
Up to
3 months
£000
Between
3 and 12 months
£000
Between
1 and 2 years
£000
42
81
86
120
2020
£000
80
81
–
161
10
171
–
127
2019
£000
34
33
96
163
6
169
Raw materials and consumables
Raw materials comprises the Group’s BioBank.
13. Trade and other receivables
Amounts receivable within one year:
Other tax and social security
Prepayments and accrued income
14. Cash and cash equivalents
Cash available on demand
At 31 December 2020, £5,000,000 was on 35 days’ notice (2019: £750,000 on 32 days’ notice).
15. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses and deferred income
2020
£000
41
2020
£000
551
8,821
9,372
2020
£000
74,976
2020
£000
1,541
224
1,514
3,279
2019
£000
41
2019
£000
43
96
139
2019
£000
2,454
2019
£000
161
114
1,215
1,490
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
16. Financial instruments
Financial assets
Amortised cost
Trade and other receivables
Cash and cash equivalents (less than one year)
Total
Financial liabilities
Other financial liabilities
Trade and other payables (less than one year)
Lease liabilities (less than one year)
Lease liabilities (greater than one year)
Total
Notes
(i)
Notes
(ii)
2020
Book and fair value
£000
2019
Book and fair value
£000
1
74,976
74,977
44
2,454
2,498
2020
Book and fair value
£000
2019
Book and fair value
£000
3,055
128
–
3,183
1,376
201
127
1,704
Credit risk
The Group’s credit risk is attributable to its banking deposits. The Group follows a risk-averse policy of treasury management. Sterling
deposits are held with one or more approved UK-based financial institutions (HSBC UK Bank plc and National Westminster Bank Plc, which
at 31 December 2020 had good short term credit ratings, being at least F1 for Fitch, P-1 for Moody’s and A-1 for Standard and Poor’s) and in
the Institutional Cash Series plc Institutional Sterling Liquidity Fund managed by BlackRock Investment Management (UK) Limited (rated at
31 December 2020 as AAAmmf by Fitch, Aaa-mf by Moody’s and AAAm by Standard and Poor’s). The Group’s primary treasury objective is to
minimise exposure to potential capital losses whilst at the same time securing prevailing market rates. The Group seeks to lessen risk by placing
its cash deposits with the three above institutions.
Currency risk
During the year under review, the Group was exposed to Euro and US Dollar currency movement as some of the manufacturing costs and
clinical trial costs are denominated in these currencies. To naturally hedge against currency movement, the Group purchases these currencies
in advance of payment due dates.
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 2020 amounted to £85.14 million (2019: £2.25 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.
Cash and cash equivalents held by the Group at 31 December 2020 amounted to £74.98 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:
(i) Trade and other receivables shown above excludes prepayments and other taxes, which are not a contractual right to receive cash,
amounting to £9,371,000 (2019: £95,000).
(ii) Trade and other payables shown above excludes amounts due in respect of social security and other taxes, which are not a contractual obligation to pay cash,
amounting to £224,000 (2019: £114,000).
The objective of holding financial instruments is to have access to finance for the Group’s operations and to manage related risks.
The main risks arising from holding these instruments are interest rate risk, liquidity risk, credit risk and currency risk.
Short-term deposits
Cash and cash equivalents
Net funds
2020
£m
–
74.98
74.98
2019
£m
–
2.45
2.45
2018
£m
0.05
5.28
5.33
2017
£m
2.00
4.85
6.85
31 Dec
2016
£m
1.66
3.11
4.77
Interest rate risk
The Group’s deposit balances are subject to the risk of fluctuating base rates.
Interest rate risk profile of financial assets, excluding short-term debtors:
Euro
Sterling
US Dollar
2020
Floating rate
financial assets
£000
2019
Floating rate
financial assets
£000
2,297
67,216
5,463
74,976
5
2,449
–
2,454
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 £46,000 (2019: £9,000).
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 2020
and 31 December 2019 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.
The Group did not have any bank borrowings as at 31 December 2020 (2019: £nil).
There have been ten significant issues of shares raising a total (net of costs) of £127.61 million, with the most recent two raising £97.89 million
in March and October 2020. The other major sources of funding received by the Group from the formation of the business until 31 December 2020
have been: revenues from licensing transactions of £9.25 million, research and development tax credits of £5.49 million, bank interest of £1.81 million,
and revenues from collaborative work of £0.79 million.
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Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020 (continued)
for the year ended 31 December 2020 (continued)
17. Share capital, share premium and share-based payment
At 1 January 2019 and 2020
Issue of ordinary shares
Costs of issue of shares
At 31 December 2020
Notes
Number
of shares
109,433,442
(i) - (v)
90,480,960
–
199,914,402
Ordinary shares
of 1p each
£000
1,094
905
–
1,999
Share
premium
£000
28,262
100,170
(3,187)
125,245
Total
£000
29,356
101,075
(3,187)
127,244
(i) A total of 40,000,000 ordinary shares of 1p were issued on 30 March 2020 (10,943,295 ordinary shares) and 15 April 2020 (29,056,705 ordinary shares) at a premium
of 34p to fund COVID-19 clinical trial activity and drug manufacturing and other supply chain considerations, and also to strengthen the Company’s balance sheet.
(ii) A total of 49,753,026 ordinary shares of 1p were issued on 19 October 2020 (14,943,300 ordinary shares) and 4 November 2020 (34,809,726 ordinary shares) at
a premium of 174p to fund: a Phase III clinical trial in COVID-19 patients; the scale up of SNG001 manufacturing and devices; the generation of additional data to
support SNG001 clinical development, manufacturing processes and regulatory activities; the strengthening of the Company’s balance sheet; and the net
settlement of options.
(iii) 534,172 ordinary shares of 1p were issued on 19 October 2020 at par following the exercise and net settlement of share options under the Company’s LTIP.
(iv) 177,300 ordinary shares of 1p were issued on 21 October 2020 at par following the exercise of share options under the Company’s LTIP.
At 31 December 2020, 1,431,282 share options were capable of being exercised, with an exercise price of 1p (2019: 3,015,503, with exercise
prices ranging from 1p to 23.5p). The options outstanding at 31 December 2020 had a weighted average remaining contractual life of 6.9 years
(2019: 6.1 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 24 and 25.
The fair value per award granted and the assumptions are as follows:
Date of Grant
21 Sept 2011
5 Apr 2018
4 Apr 2019
18 Jun 2020
Type of
award
Number of
shares
Exercise
price (p)
LTIP
LTIP
LTIP
LTIP
1,431,282
2,822,316
2,649,696
1,767,985
8,671,279
1p
1p
1p
1p
Share price
at date of
grant (p)
22.5p
13.0p
12.5p
39.5p
Fair value per
option (p)
Award life
(years) Risk free rate
Expected
volatility
rate
Performance
conditions
13.4p
7.5p
6.2p
25.8p
3
3
3
3
0.79%
0.90%
0.70%
0.00%
56%
56%
59%
80%
Market
Market
Market
Market
The Company has applied IFRS 2 to all the above share-based payments and the following comments apply to these options:
(i) Stochastic valuation methodology was used for all 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
(v) 16,462 ordinary shares of 1p were issued on 22 October 2020 at par following the exercise of share options under the Company’s LTIP.
payment of dividends.
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.
All issued shares are fully paid.
Options
At 31 December 2020 there were options outstanding over 8,671,279 un-issued ordinary shares, equivalent to 4.3% of the
issued share capital, as follows:
Date of grant
Note
Number of shares
Exercise price
Earliest exercise date
Latest exercise date
21 September 2011 (LTIP)
5 April 2018 (LTIP)
4 April 2019 (LTIP)
18 June 2020 (LTIP)
(i)
(ii)
(ii)
(ii)
1,431,282
2,822,316
2,649,696
1,767,985
8,671,279
1p
1p
1p
1p
21 September 2014
20 September 2021
5 April 2021
4 April 2022
18 June 2023
4 April 2028
3 April 2029
17 June 2030
Notes
These options are vested in full.
(i)
(ii) The vesting performance conditions for these options are detailed in the Directors’ Remuneration Report on page 25.
The Group has no legal or constructive obligation to repurchase or settle the options in cash.
The movement in the number of share options is set out below:
Outstanding at start of the year
Granted during the year
Exercised during the year
Lapsed during the year
Number of outstanding options at year-end
Number
8,487,515
1,767,985
(1,371,456)
(212,765)
8,671,279
2020
Weighted average
exercise price
1.6p
1.0p
1.0p
23.5p
1.0p
2019
Weighted average
exercise price
2.6p
1.0p
n/a
20.0p
1.6p
Number
6,087,819
2,649,696
–
(250,000)
8,487,515
(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) Volatility for the grants made in 2018 and 2019 was calculated by reviewing share price movement over the period of three years prior to grant,
excluding any large share price movements (as these were not considered to be representative of future expectations of volatility). Volatility for the
grant made in 2020 was calculated by reviewing share price movement over the period of three years prior to grant with no adjustments.
(vi) The charge for the year ended 31 December 2020 for share-based payment amounted to £207,000 (2019: £111,000). An amount of £1,291,000 (2019: £nil) was
debited directly to reserves following the net settlement of share options in order to satisfy scheme participants’ tax and NI liabilities on options exercised.
18. Capital and reserves
18a Share capital
Share capital represents the nominal value of shares issued.
18b Share premium
Share premium represents amounts subscribed for share capital in excess of nominal value less the related costs of share issues.
18c Merger reserve
The merger reserve represents the reserve arising on the acquisition of Synairgen Research Limited on 11 October 2004 via a share for share
exchange accounted for as a Group reconstruction using merger accounting under UK GAAP.
18d Retained deficit
The retained deficit represents cumulative net gains and losses recognised in the consolidated statement of comprehensive income, adjusted for
cumulative recognised share-based payments.
19. Related party transactions and balances
Details of key management personnel and their compensation are given in note 5 and on page 27 of the Directors’ Remuneration Report.
20. Other commitments
At 31 December 2020 the Group had entered into non-cancellable purchase commitments amounting to £9.7 million (2019: £nil) in respect of
manufacturing-related activities.
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Parent Company Balance Sheet
as at 31 December 2020
Parent Company Statement of
Changes in Equity
for the year ended 31 December 2020
Company number: 5233429
Fixed assets
Investments
Current assets
Debtors
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
Notes
31 December 2020
£000
31 December 2019
£000
4
5
6
51,059
26,893
At 1 January 2019
Loss for the year and total comprehensive loss
Share-based payment credit
At 31 December 2019
Loss for the year and total comprehensive loss
Issue of ordinary shares
Transaction costs in respect of share issues
Share-based payment credit
Net settlement of share options
At 31 December 2020
143
74,694
74,837
(93)
74,744
125,803
1,999
125,245
(1,441)
125,803
109
2,445
2,554
(44)
2,510
29,403
1,094
28,262
47
29,403
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 2020 was £404,000 (2019: loss of £221,000).
The financial statements on pages 53 to 57 were approved and authorised for issue by the Board of directors on 11 May 2021 and
signed on its behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Chief Financial Officer
Share
capital
£000
1,094
–
–
1,094
–
905
–
–
–
Share premium
account
£000
Retained
earnings
£000
Shareholders’
funds
£000
28,262
–
–
28,262
–
100,170
(3,187)
–
–
157
(221)
111
47
(404)
–
–
207
(1,291)
(1,441)
29,513
(221)
111
29,403
(404)
101,075
(3,187)
207
(1,291)
125,803
1,999
125,245
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Notes to the Parent Company Financial Statements
Notes to the Parent Company Financial Statements
for the year ended 31 December 2020
for the year ended 31 December 2020 (continued)
1. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).
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:
• 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.
Going Concern
The directors have prepared financial forecasts for the next twelve months to estimate the likely cash requirements of the Company
and its subsidiary Synairgen Research Limited, to which the Company has confirmed its intention to provide financial support for a
period of not less than twelve months from the date that its financial statements for the year ended 31 December 2020 are signed,
given its stage of development and lack of recurring revenues. In preparing these financial forecasts, the directors have made certain
assumptions with regards to the timing and amount of future expenditure over which they have control. The directors have attempted
to take a prudent view in preparing these forecasts, recognising the inherent variability in costs of the ongoing Phase III clinical trial
of SNG001 in COVID-19 patients and the manufacturing scale up activities being conducted by Synairgen Research Limited.
After due consideration of these forecasts and current cash resources, the directors consider that the Company has 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.
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.
Investments 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 financial assets held at amortised cost.
These assets incorporate types of financial assets where the objective is to hold these assets in order to collect contractual
cash flows and the contractual cash flows are solely payments of principal and interest. 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.
The Company’s financial assets measured at amortised cost comprise debtors, investments: short-term deposits and
cash and cash equivalents in the balance sheet. Investments: short-term deposits 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 highly liquid investments with original maturities of three months or less.
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.
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.
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 £51.1 million (2019: £26.9 million).
At 31 December 2020, the Directors assessed recoverable amount by reference to Synairgen Research Limited’s fair value less costs to sell,
estimated by reference to the AIM market capitalisation of the Group (since all group intellectual property is owned by the subsidiary)
at that date, £306 million. No impairment was identified.
3. Profit and loss account
The only employees of the Company during 2020 and 2019 were the three executive directors. Their aggregate remuneration,
which is borne by the Company’s subsidiary undertaking, comprised:
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Total cash-settled remuneration
Accrued holiday pay
Share-based payment
Total remuneration
2020
£000
956
130
59
1,145
43
152
1,340
2019
£000
921
126
54
1,101
(5)
85
1,181
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 27, which are ascribed as forming part of these financial statements.
Auditor’s remuneration is disclosed in note 4 to the Group accounts on page 43.
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Notes to the Parent Company Financial Statements
for the year ended 31 December 2020 (continued)
4. Investments
At 1 January 2020
Capital contribution for the year
Subsidiary share-based payment
Net settlement of share options
At 31 December 2020
Investment in
subsidiary
undertaking
£000
140
–
–
–
140
Capital
contribution
£000
26,753
25,250
207
(1,291)
50,919
Total
£000
26,893
25,250
207
(1,291)
51,059
At 31 December 2020, the Company has an investment in the following subsidiary undertaking:
Name of company
Synairgen Research Limited
5. Debtors
Registered address
Proportion of voting rights
and ordinary share capital held
Nature of business
Mailpoint 810,
Southampton General Hospital,
Tremona Road,
Southampton SO16 6YD
100%
Drug discovery and development
Other tax and social security
Prepayments and accrued income
Amounts due from subsidiary undertaking
All amounts fall due for payment within one year.
6. Creditors: amounts falling due within one year
Trade creditors
Accruals and deferred income
2020
£000
29
97
17
143
2020
£000
33
60
93
2019
£000
3
103
3
109
2019
£000
3
41
44
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 51 and 52.
Corporate
Directory
Company number
5233429
Directors
Executive: Richard Marsden,
Dr Phillip Monk, John Ward
Non-executive: Simon Shaw (Chairman),
Iain Buchanan, Dr Bruce Campbell,
Prof. Sir Stephen Holgate CBE
Secretary
Simon Holden
Head office and Registered office
Mailpoint 810,
Southampton General Hospital,
Tremona Road, Southampton SO16 6YD
Telephone and fax: +44 (0) 23 8051 2800
Website
www.synairgen.com
E-mail
info@synairgen.com
Advisers
Independent auditor
BDO LLP
Level 12, Thames Tower, Station Road,
Reading RG1 1LX
Bankers
HSBC UK 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
One Bartholomew Close, London, EC1A 7BL
Joint broker
Numis Securities Limited
The London Stock Exchange Building,
10 Paternoster Square, London EC4M 7LT
Registrars
Link Group
10th Floor, Central Square,
29 Wellington Street, Leeds LS1 4DL
Solicitors
Fieldfisher LLP
Riverbank House, 2 Swan Lane,
London EC4R 3TT
Glossary
Accelerating COVID-19 Therapeutic
Interventions and Vaccines (ACTIV)
programme
NIH’s ACTIV programme is a public-
private partnership to develop a
coordinated research strategy to
speed up the development of the most
promising treatments and vaccine
candidates for COVID-19
ACTIV-2
A master protocol designed for
evaluating multiple investigational
agents compared to placebo in adults
with mild to-moderate COVID-19, not
requiring hospitalisation
Acute
An acute disease is a disease with a
rapid onset and/or a short course
Aerogen-Ultra
A portable mesh nebuliser
manufactured by Aerogen that allows
for continuous delivery of inhaled drugs
to the airways
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-1a formulation
(aka SNG001) used for the AstraZeneca
INEXAS study. See INEXAS
Bacteria
Single-cell organisms that are found
everywhere and are the cause of
many diseases
BCSS
The breathlessness, cough and sputum
scale (BCSS) is a three-item questionnaire,
rating breathlessness, cough and
sputum on a 5-point scale from 0 (no
symptoms) to 4 (severe symptoms)
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
Biologics License Application (BLA)
A request for permission to introduce,
or deliver for introduction, a biologic
product into interstate commerce.
Regulated by the FDA
Breathlessness, Cough and
Sputum Scale (BCSS)
A three-item questionnaire rating
breathlessness, cough and sputum
on a 5-point Likert scale from 0 (no
symptoms) to 4 (severe symptoms)
Brief Pain Inventory - Short Form
A 9 item self-administered questionnaire
used to evaluate the severity of a
patient’s pain and the impact of this pain
on the patient’s daily functioning
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
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Glossary
(continued)
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
CAT
The COPD Assessment Test (CAT) is
a patient-completed questionnaire,
which assists patients and their
physicians in quantifying the
impact of COPD on the patient’s
health and quality of life
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
Community Acquired
Pneumonia (CAP)
Pneumonia that is acquired outside
of the hospital setting
Contract Research
Organisation (CRO)
A company that provides support
to the pharmaceutical industries in
the form of research services out
sourced on a contract basis
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
COVID-19
Coronavirus disease 2019 is a
respiratory illness caused by
SARS-CoV-2
COVID-19 symptom
assessment
A self-reported assessment of the
presence of COVID-19 symptoms
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
Double-blind
A double-blind study is one in
which neither the patients nor the
clinical staff know who is receiving
a particular treatment
Drug Product
The formulated drug substance
with excipients. These excipients
do not have a therapeutic effect
but can influence the delivery
of the drug substance. The drug
product is typically the final
marketed dosage form of the drug
substance for example a tablet or
capsule
Drug Substance
The unformulated active
pharmaceutical ingredient
DSMC
A Data Safety Monitoring
Committee (DSMC) reviews and
assesses safety information from a
clinical trial
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
Emergency Use
Authorisation (EUA)
Authorisation by the FDA of
unapproved medical products
or unapproved uses of approved
medical products to be used in an
emergency to diagnose, treat, or
prevent serious or life-threatening
diseases
European Medicines
Agency (EMA)
The EMA evaluate and supervise
medicines for the benefit of public
and animal health in the European
Union (EU)
EuroQuol 5 Dimension
5 Level (Eq-5D-5L)
A self-assessed, health related,
quality of life questionnaire. The
scale measures quality of life on
a 5-component scale including
mobility, self-care, usual activities,
pain/discomfort, and anxiety/
depression. The responses record
5 levels of severity
Exacerbation
A rapid deterioration of a chronic
disease that makes the symptoms
worse
Fast Track Designation
A designation by the United States
Food and Drug Administration
(FDA) of an investigational drug
for expedited review to facilitate
development of drugs to treat
a serious or life-threatening
condition to fill an unmet medical
need
FDA
USA Food and Drug Administration.
An American body that is
responsible for protecting public
health by ensuring the safety,
efficacy, and security of human
and veterinary drugs, biological
products, and medical devices;
and by ensuring the safety of our
nation’s food supply, cosmetics,
and products that emit radiation
FEV1
Forced Expiratory Volume in the
first second. The volume of air that
can be forced out in one second
after taking a deep breath, an
important measure of pulmonary
function
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
Fibrosis
The thickening and scarring of
connective tissue, usually as a
result of injury
BIOFIRE® FILMARRAY®
A system which enables rapid
simultaneous testing for a
panel of viruses and bacteria in
patient samples and was used by
Synairgen in SG015
Functional Assessment of
Chronic Illness Therapy –
Fatigue (FACIT-F)
A 13-item tool that measures an
individual’s level of fatigue during
their usual daily activities over the
past week. The level of fatigue is
measured on a four-point Likert
scale (4 = not at all fatigued to 0 =
very much fatigued)
Generalised Anxiety Disorder
Assessment (GAD-7)
A seven-item instrument that is
used to measure or assess the
severity of generalised anxiety
disorder (GAD)
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
I-neb
A nebuliser manufactured by
Philips that delivers inhaled drugs
to the airway
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
Intention to Treat (ITT)
All patients that were enrolled
and randomly assigned to a
treatment arm
Investigational
New Drug (IND)
A drug developed by the sponsor
that is ready for clinical trials in humans
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
Long COVID
Long COVID (Post-COVID-19
syndrome) is defined as “signs and
symptoms that develop during or
following an infection consistent
with COVID-19, that continue
for more than 12 weeks and are
not explained by an alternative
diagnosis”
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
Managed Access Programme
A programme through which
physicians can prescribe, within
their professional responsibility,
a yet unapproved treatment for
patients with serious or life-
threatening diseases or conditions
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
National Early Warning Score
(NEWS2)
A system for scoring the
physiological measurements
that are routinely recorded at
the patient’s bedside; respiration
rate, oxygen saturation, systolic
blood pressure, pulse rate, level of
consciousness or new confusion
and temperature
National Institute of Health
and Research (NIHR)
UK funding body for health and
care research
Operation Warp Speed (OWS)
A public–private partnership
initiated by the U.S. government
to facilitate and accelerate the
development, manufacturing, and
distribution of COVID-19 vaccines,
therapeutics, and diagnostics
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
Patient Health
Questionnaire (PHQ-9)
PHQ-9 is a self-assessed nine
question form used to screen
depression and monitor changes in
signs/symptoms of depression
Peak expiratory flow
A lung function test that measures
a person’s ability to breathe out air
Pharmaxis or
Pharmaxis Limited
An established pharmaceutical
research company based in
Australia with whom Synairgen
collaborated on the LOXL2
programme. Pharmaxis is quoted
on the Australian Securities
Exchange (ASX) under the code
PXS. Its website address is
www.pharmaxis.com.au
Phase I Clinical Trial
A study conducted in volunteers
to determine the biological effects
of a drug, especially safety and
tolerability
Phase II Clinical Trial
A study in patients with the
aim of making a preliminary
determination of the efficacy of a
drug to provide proof of concept
and/or to study drug dose ranges
Phase IIa Clinical Trial
Used to describe a Phase II clinical
trial evaluating efficacy, adverse
effects and safety risks
Phase IIb Clinical Trial
Used to describe a subsequent
Phase II clinical trial that also
evaluates dosage tolerance and
optimal dosage frequency in a
larger number of patients than
enrolled in a Phase IIa trial
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-clinical
A stage of drug development
preceding human clinical trials
Primary endpoint
The most important measure
(endpoint) assessed in a
clinical trial
59 | Synairgen plc annual report and accounts 2020 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2020 | 60
Glossary
(continued)
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
Randomisation
The random assignment of
patients in a clinical trial to different
treatment groups (e.g. active drug
or placebo)
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
Safety study
See Phase I Clinical Trial
SARS-CoV-2
Severe Acute Respiratory
Syndrome-Coronavirus 2 is the
virus strain that causes COVID-19
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
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-blind,
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
SG015
A randomised, double-blind,
placebo-controlled phase II study
in COPD patients without (Part 1)
and with (Part 2) a confirmed
respiratory virus infection,
assessing antiviral biomarker
responses and clinical effects
of inhaled SNG001 compared
to placebo
SG016 Home Study
Synairgen’s randomised, double-
blind, placebo-controlled trial to
determine the safety and efficacy
of inhaled SNG001 (IFN-β1a for
nebulisation) for the treatment of
patients with confirmed SARS-
CoV-2 infection in the home
environment
SG016 Hospital Study
Synairgen’s randomised, double-
blind, placebo-controlled trial to
determine the safety and efficacy
of inhaled SNG001 (IFN-β1a for
nebulisation) for the treatment of
patients with confirmed SARS-
CoV-2 infection in the hospital
setting
SG018
Synairgen’s Phase III Trial evaluating
inhaled interferon beta in hospitalised
COVID-19 patients. A randomised
double-blind placebo-controlled
study being conducted in
approximately 20 countries enrolling
a total of 610 COVID-19 patients
SNG001
A formulation of Interferon Beta-
1a delivered to the lung using a
nebuliser
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
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
United States National Institute
of Health (US NIH)
The medical research agency of
the USA
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
World Health Organisation
(WHO)
A United Nations body responsible
for international public health
World Health Organisation
(WHO) Ordinal Scale for Clinical
Improvement (OSCI)
A scale used to measure clinical
improvement in patients from a
score of 0; uninfected to 8; death
Wheeze
A whistling sound made by a
person who has airflow obstruction
when breathing
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