Final Results

  26 September 2011 Sareum Holdings plc ("Sareum" or "the Company") Final Results Sareum Holdings plc (AIM: SAR), the specialist cancer drug discovery business, is pleased to announce its final results for the year ended 30 June 2011. Operational Highlights * Significant progress on the two most advanced cancer programmes including positive in-vivo efficacy data from Chk1 and Aurora+FLT3 programmes * Nomination of preclinical development candidate for Chk1 in August 2011 Financial Highlights * £950,000 (before expenses) raised by way of three share placings * Cash at bank and in hand of £871,000; sufficient cash resources for foreseeable future, based on current spending levels * Loss on ordinary activities (after taxation) £568,000 (2010: £569,000 loss) in line with expectations Tim Mitchell, Chief Executive Officer of the Company, said: "The announcement of two successful in-vivo efficacy studies, and the selection of a preclinical development candidate, bring Sareum closer to the commercialisation of drug candidates from our in-house development pipeline.  We are currently actively seeking to license these programmes in order to allow us to drive forward other programmes that have been generated from our SKIL® platform. The placings during the course of the year, which raised a total of £950,000, have provided us with sufficient working capital for the foreseeable future to continue the current level of development of our in-house programmes." Enquiries: Sareum Holdings plc Tim Mitchell 01223 497 700 Merchant Securities Limited (Nomad) Simon Clements 020 7628 2200 Hybridan LLP (Broker) Claire Noyce 020 7947 4350 The Communications Portfolio (Media enquiries) Tel: +44 (0) 20 7536 2028 / 2029 Ariane Comstive / Caolan Mahon ariane.comstive@communications-portfolio.co.uk Chairman's statement Sareum has made significant progress in the last year advancing its cancer drug programmes to a point where we are now actively engaged in talks over potential licensing and co-development agreements with interested parties. Our focus has been on the two most advanced programmes, whilst continuing to generate new lead compounds through the use of our SKIL® (Sareum Kinase Inhibitor Library) technology platform to build a pipeline of potential candidate compounds for the future. The Company raised a total of £950,000 (before expenses) in three separate fund raisings during the course of the financial year.  The funds are being used to support ongoing development work and to progress new programmes. This research work continues to be outsourced to our international network of 3rd party providers, thus maintaining a low operational cost base. The Directors believe there is currently sufficient working capital for the foreseeable future based on the current spending levels. Net assets at the year-end were £876,000, principally arising from the cash at bank and in hand of £871,000.  The loss after taxation was £568,000 (2010: £569,000 loss). Advanced programmes Chk1 Kinase Inhibitors This remains Sareum's most advanced programme, targeting Checkpoint Kinase 1.  Chk1 is important in controlling the way many cancer cells respond to DNA damage, which may be a consequence of the cancer itself, or intentionally caused by chemotherapy or radiotherapy. Inhibition of Chk1 affects the ability of the cell to repair this damage and can therefore potentiate the effect of certain chemotherapeutic drugs. In March 2011, the Company and its collaboration partners, The Institute of Cancer Research and Cancer Research Technology Ltd., announced positive in-vivo results from the Chk1 programme in a colon cancer model study.  The results demonstrate that the combination of our Chk1 inhibitor, dosed via the oral route with a chemotherapeutic, gemcitabine, offers a greater than two-fold reduction in cancer growth rate compared to treatment with the same dose of gemcitabine without the Chk1 inhibitor. In August 2011, after further positive model studies, the Company, in collaboration with its partners, was able to announce the selection of a preclinical development candidate, representing a significant milestone in the programme's progress. Sareum, along with its collaboration partners, continues to discuss Chk1 with several interested licensing partners, who are reviewing the full data pack for the preclinical development candidate. In the meantime we are undertaking further efficacy model studies to demonstrate the compound's ability to potentiate further chemo- and radio- therapies against a wider range of cancer types. Aurora Kinase inhibitors Progress on the Company's Aurora kinase inhibitors continued as planned having been evaluated in in-vivo efficacy models. Inhibition of Aurora kinase affects mitosis (cell division), and has the potential to treat many types of cancer, including acute myeloid leukaemia (AML), the most common form of adult leukaemia. In February, we announced the successful results of a model study measuring the effect of one of our dual Aurora+FLT3 inhibitors against AML. The study showed that the leukaemia regressed to such an extent that no detectable cancer could be found in any of the 10 cases treated with a Sareum compound. The study compares very favourably with similar studies published in literature for the Aurora kinase inhibitors that are currently in clinical trials. The Company continues to develop compounds with dual Aurora and Anaplastic Lymphoma Kinase (ALK) activity, as well as selective ALK inhibitors. Development is focussed on lung cancers and childhood neuroblastomas resistant to current ALK inhibitors, such as Pfizer's recently approved Xalcori (crizotinib). We continue to seek licensing or co-development partners for this programme, which is wholly owned by Sareum. Whilst we do this, we are carrying out further experiments to select a potential Aurora+FLT3 preclinical development candidate, and to optimise a sub-group of programme compounds that can be orally dosed. Other SKIL® programmes Through our SKIL® platform, the Company has developed chemical leads that inhibit the activity of VEGFR-3 kinase, levels of which are often elevated in many different types of cancer including lung, gastric and prostate. We are researching a lead series of compounds that demonstrate potent inhibition of lymph cell growth by selectively inhibiting VEGFR-3. Lymph vessels are known to be a major route of metastasis, therefore inhibitors of VEGFR-3 have the potential to reduce, delay or inhibit the spread of cancer throughout the body. The Company has also developed a series of compounds showing activity against the TYK2 kinase, which target auto-immune diseases such as multiple sclerosis and rheumatoid arthritis. Although the programme is at a relatively early stage, we have been encouraged by the level of commercial interest in these compounds. Outlook The Company continues to focus on its in-house drug discovery programmes targeting cancer and, more recently, auto-immune disease. We are particularly encouraged by the on-going discussions taking place for license, co-development or sponsored research deals for Aurora+FLT3, Chk1 and TYK2. Much of this interest has been generated by presenting at major international conferences, such as the International Drug Discovery Science and Technology (IDDST) meeting in China which took place during October 2010, the One Nucleus Oncology leadership conference in May this year and the European Cancer Cluster Partnering (ECCP) which took place in September this year. In order to market its programmes further, the Company will be presenting at, or attending, a number of conferences over the coming months including the European Organisation for Research and Treatment of Cancer (EORTC) conference in November 2011, and Bio-Europe, also in November 2011. Whilst discussions continue, we are undertaking further studies to demonstrate the potential use of all our compounds in a range of cancers and auto-immune diseases.  This will ultimately make them more attractive to potential partners. With our programmes in, or close to, preclinical development and, based on current spending levels, sufficient cash for the foreseeable future, we are looking forward to being able to update shareholders of significant progress. Dr. Paul Harper Chairman Consolidated Income Statement for the Year Ended 30 June 2011     2011   2010   Notes £   £ CONTINUING OPERATIONS Revenue   -   - Administrative expenses   (637,859)   (643,742) ------------- ------------ OPERATING LOSS   (637,859)   (643,742) Finance income   9,611   3,127 ------------- ------------ LOSS BEFORE INCOME TAX 3 (628,248) (640,615) Income tax 4 59,890   71,526 ------------- ------------ LOSS FOR THE YEAR (568,358) (569,089) Loss attributable to: Owners of the parent   (568,358)   (569,089) Earnings per share expressed in pence per share: Basic 5 (0.04)p   (0.05)p Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2011   2011   2010   £   £ LOSS FOR THE YEAR (568,358)   (569,089) OTHER COMPREHENSIVE INCOME -   - ------------- ------------ TOTAL COMPREHENSIVE INCOME FOR THE YEAR (568,358)   (569,089) Total comprehensive income attributable to: Owners of the parent (568,358)   (569,089) Consolidated Balance Sheet 30 June 2011     2011   2010   Notes £   £ ASSETS NON-CURRENT ASSETS Intangible assets   393   984 Property, plant and equipment   851   1,230 Investments   -   - --------------- --------------     1,244   2,214 --------------- -------------- CURRENT ASSETS Trade and other receivables   40,768   26,627 Tax receivable   60,090   74,974 Cash and cash equivalents 6 870,829   516,781 --------------- --------------     971,687   618,382 --------------- -------------- LIABILITIES CURRENT LIABILITIES Trade and other payables   97,168   97,558 --------------- -------------- NET CURRENT ASSETS 874,519 520,824 --------------- -------------- NET ASSETS 875,763 523,038 SHAREHOLDERS' EQUITY Called up share capital   362,649   293,899 Share premium   6,901,816   6,077,821 Share-based compensation reserve   28,338   - Merger reserve   27   27 Retained earnings   (6,417,067)   (5,848,709) --------------- -------------- TOTAL EQUITY 875,763 523,038 Consolidated Statement of Changes in Equity for the Year Ended 30 June 2011   Called up share Profit and loss capital   account   Share premium   £   £   £ Balance at 1 July 2009 204,524 (5,279,620) 5,401,631 Changes in equity Issue of share capital 89,375 - 676,190 Total comprehensive income - (569,089) - ---------------------- --------------------- -------------- Balance at 30 June 2010 293,899 (5,848,709) 6,077,821 ---------------------- --------------------- -------------- Changes in equity Issue of share capital 68,750 - 823,995 Total comprehensive income - (568,358) - Share-based compensation - - - ---------------------- --------------------- -------------- Balance at 362,649 (6,417,067) 6,901,816 30 June 2011   Share-based compensation reserve   Merger reserve   Total equity   £   £   £ Balance at 1 July 2009 - 27 326,562 Changes in equity Issue of share capital - - 765,565 Total comprehensive income - - (569,089) ---------------------- --------------------- -------------- Balance at 30 June 2010 - 27 523,038 ---------------------- --------------------- -------------- Changes in equity Issue of share capital - - 892,745 Total comprehensive income - - (568,358) Share-based compensation 28,338 - 28,338 ---------------------- --------------------- -------------- Balance at 30 June 2011 28,338 27 875,763 Consolidated Cash Flow Statement for the Year Ended 30 June 2011     2011   2010   Notes £   £ Cash flows from operating activities Cash generated from operations 7 (622,918)   (589,102) Tax paid   74,774   64,412 ----------- ---------- Net cash from operating activities   (548,144)   (524,690) ----------- ---------- Cash flows from investing activities Purchase of tangible fixed assets   (264)   (1,198) Sale of tangible fixed assets   100   - Interest received   9,611   3,127 ----------- ---------- Net cash from investing activities 9,447 1,929 ----------- ---------- Cash flows from financing activities Share issue   68,750   89,375 Share premium on share issue   823,995   676,190 ----------- ---------- Net cash from financing activities   892,745   765,565 ----------- ---------- ----------- ---------- Increase in cash and cash equivalents   354,048   242,804 Cash and cash equivalents at beginning of year   516,781   273,977 ----------- ---------- Cash and cash equivalents at end of year 6 870,829 516,781 Notes to the Consolidated Financial Statements for the Year Ended 30 June 2011 1.Adoption of New and Revised International Financial Reporting Standards ("IFRS") In the current year, the Group has adopted all of the revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations. The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial performance or financial position of the Group in the current or prior periods. - Revised IFRS 1 - First-time Adoption of International Reporting Standards; - Revised IFRS 3 - Business Combinations - Revised IAS 24 - Related Party Disclosures - Improvements to IFRS (2010) - IFRIC 19 - Extinguishing financial liabilities with equity instruments - IFRIC 14 - IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction. None of these have had an effect on the accounts of the Group. There are no published Standards/Interpretations not yet in force that will have any significant impact on the Group. 2.Accounting Policies Basis of preparation The consolidated financial statements of Sareum Holdings plc and its subsidiaries (the Group) have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted for use in the European Union, with IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. IFRS comprise standards and interpretations approved by the International Accounting Standards Board (IASB). IFRS as adopted by the European Union differ in certain respects from IFRS as issued by the IASB. However, consolidated financial statements for the financial years presented would be no different had IFRS as issued by the IASB been applied. References to IFRS hereafter should be construed as references to IFRS as adopted by the European Union. Going concern The financial statements have been prepared on a going concern basis, which assumes that sufficient funds will be available for the Group to continue in operational existence for the foreseeable future. Sareum Holdings plc is a research and development based business with, at present, no currently marketed products. The Directors estimate that the cash held by the Group will be sufficient to support the current level of activities into the fourth quarter of 2012. The Directors also expect to secure equity- based financing sufficient for the future needs of the business beyond this date. The Directors' confidence in the Group's ability to raise equity-based financing is underwritten by the funds of £950,000 (before expenses) raised by way of placings of new ordinary shares on AIM during the year under review. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of another entity or business, so as to obtain benefits from its activities. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are eliminated on consolidation. Amortisation of intangibles Amortisation is calculated so as to write off the cost of an asset over the useful economic life of that asset as follows: Intellectual property                        - straight line over 5 years Property, plant and equipment Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. Fixtures and computers          - straight line over 3 or 4 years Financial instruments Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either, financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of change in value. Taxation Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exception: Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on the tax rates and laws enacted or substantively enacted at the balance sheet date. Research and development Expenditure on research and development is written off in the year in which it is incurred. Operating lease agreements Rentals applicable to operating leases where substantially all the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease. Pension contributions The Group does not operate a pension scheme for the benefit of its employees, but instead makes contributions to their personal pension policies.  The contributions due for the period are charged to the profit and loss account. Employee share scheme The Group has in place a share option scheme for employees, which allows them to acquire shares in the Company. Equity settled share-based payments are measured at fair value at the date of grant. The fair value of options granted is recognised as an expense spread over the estimated vesting period of the options granted. Fair value is measured using the Black-Scholes model, taking into account the terms and conditions upon which the options were granted. 3.Loss before Income Tax The loss before income tax is stated after charging:     2011   2010     £   £ Other operating leases   10,726   10,723 Depreciation - owned assets   487   1,138 Loss on disposal of fixed assets   56   - Intellectual property amortisation   591   591 Research and development   282,733   353,829 Auditors' remuneration - see analysis below   11,790   9,750 The analysis of auditors' remuneration is as follows: Fees payable to the Company's auditor for the audit of the annual accounts Audit of the Company   3,700   3,500 Audit of subsidiaries   5,780   5,500 --------- -------- Total Audit Fees   9,480   9,000 Fees payable to the Company's auditors for other services Taxation services   2,310   750 --------- -------- Total fees payable to the Company's auditor   11,790   9,750 4.Income Tax     2011   2010     £   £ Current tax: UK corporation tax credit on losses of the period   (54,887)   (63,165) Adjustments recognised in the current year in relation to the current tax of prior years (5,003) (8,361) ---------- --------- Tax credit to the income statement   (59,890)   (71,526) The credit for the year can be reconciled to the accounting loss as follows:     2011   2010     £   £ Current tax: Loss before tax   (628,248)   (640,615) At standard rate of 21% (2010 - 21%)   (131,932)   (134,529) Effects of: Expenses not allowable for tax purposes   5,951   8,447 Capital allowances in excess of depreciation   (938)   (1,419) Unutilised tax losses   79,873   73,016 Losses surrendered for research and development tax credits (less uplift) 47,046 54,485 Research and development tax credits claimed   (54,887)   (63,165) Prior year adjustments   (5,003)   (8,361) ----------- ---------- Actual current tax credit in the year   (59,890)   (71,526) The tax rate used above for the 2011 and 2010 reconciliations of 21% is the small company corporation tax rate applicable in the United Kingdom, on taxable profits under tax law in that jurisdiction. 5.Earnings per Share The calculation of loss per share is based on the following data:   2011 2010 Loss on ordinary activities after tax £(568,358) £(569,089) Weighted average number of shares for basic loss per share 1,348,885,384 1,086,227,850 Basic loss per share (0.04p) (0.05p) As the Group has generated a loss for the period, there is no dilutive effect in respect of share options. 6.Cash and Cash Equivalents     2011   2010     £   £ Bank deposit account   859,978   506,637 Bank accounts   10,851   10,144 ----------- ----------     870,829   516,781 7.Reconciliation of Loss before Income Tax to Cash Generated from Operations     2011   2010     £   £ Loss before income tax   (628,248)   (640,615) Depreciation charges   1,078   1,729 Loss on disposal of fixed assets   56   - Add back: Share-based compensation   28,338   - Finance income   (9,611)   (3,127) ----------- ----------     (608,387)   (642,013) (Increase)/Decrease in trade and other receivables   (14,141)   6,992 (Decrease)/Increase in trade and other payables   (390)   45,919 ----------- ---------- Cash generated from operations   (622,918)   (589,102) 8.        Dividend The Directors are not able to recommend a payment of a dividend. 9.        Copies of the Report and Accounts Copies of the report and accounts will be posted to those Shareholders that have requested them shortly. Copies will also be available from the Company's registered office at 2a Langford Arch, London Road, Pampisford, Cambridgeshire CB22 3FX and from the Company's website www.sareum.co.uk. This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: SAREUM HOLDINGS PLC via Thomson Reuters ONE [HUG#1549479]

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