Interim results for the six months ended 30 June 2021

Synairgen plc
(‘Synairgen’ or the ‘Company’)

Interim results for the six months ended 30 June 2021

Scaling up and preparing for Phase III COVID-19 trial data read-out

Webcast today at 13:00 BST

Southampton, UK – 30 September 2021: Synairgen plc (LSE: SNG), the drug discovery, development and commercialisation company, today announces its unaudited interim results for the six months ended 30 June 2021.

Richard Marsden, CEO of Synairgen, said: “The need for an effective, broad-spectrum antiviral to treat patients hospitalised due to COVID-19 remains urgent. While vaccines have played an important role in reducing many of the risks associated with the SARS-CoV-2 virus, thousands of patients continue to require hospital treatment in the US and Europe every day with acute symptoms from COVID-19. This, coupled with the potential of waning immunity and the emergence of new SARS-CoV-2 variants, highlights the urgent need for additional effective antiviral therapies.

“The Phase III SPRINTER trial of SNG001 is progressing well, with the last patient expected to be enrolled during November. SNG001 is an inhaled, broad-spectrum antiviral interferon beta (IFN-beta) formulation, which is delivered directly to the lower respiratory tract, stimulating the lungs’ immune defences, and has an established safety profile. Positive data from this trial would represent a major breakthrough in the battle against COVID-19. To ensure we can get this treatment to patients as quickly as possible, we are preparing to engage the US FDA on a potential application for Emergency Use Authorisation (EUA) and have aligned with partners with COVID-19 expertise for distribution and in-market support.”

Operational highlights (including post period end)

Synairgen’s wholly-owned lead programme SNG001 has potential value in three settings:

• COVID-19 patients hospitalised due to severe lower respiratory tract (LRT) symptoms;
• Government stockpiling for future pandemic preparedness; and
• Severe viral lung infections caused by regular common cold and flu viruses that lead to hospitalisation.

Earlier work establishing safety, dosing regimen, and patient selection, has been instrumental in paving the way for rapid and significant progress during this pandemic.

Phase III trial progress and preparation for regulatory submissions

• Good progress with the global Phase III SPRINTER study of Synairgen’s interferon beta (IFN-beta) formulation, SNG001, being developed for hospitalised (non-ventilated) patients suffering from COVID-19 infection, with approaching 80% of trial participants enrolled to date. Due to the sporadic nature of the pandemic in different regions, we now expect the last patient to be enrolled during November, with top line results expected in early 2022
• Progression of commercial scale manufacturing processes for drug substance and drug product

• Continued engagement with the US FDA on requirements and content for regulatory submissions
• Continues to build distribution, pre-commercialisation and commercialisation capabilities
• Experienced, commercially-focused senior leadership team appointed in manufacturing, communications and corporate affairs, and commercial positions. Use of third party COVID-19-experienced contractors for distribution and in-market support

Other operating highlights

• Positive results from in vitro studies showing antiviral activity of IFN-beta against key COVID-19 variants announced in May 2021, with further testing underway
• Combined data from the hospital and home cohorts of Synairgen’s Phase II study showed that the more breathless patients are significantly more likely (>3 fold) to recover on SNG001 than placebo
• Phase II recruitment completed for study of SNG001 in the ongoing US government funded ACTIV-2 trial evaluating patients with mild to moderate COVID-19 symptoms in the home setting. Results are being assessed to determine whether SNG001 will be progressed into the Phase III part of this Phase II/III trial

Financial highlights

• Loss before tax for the six months ended 30 June 2021 was £38.89 million (30 June 2020: £5.07 million loss)
  • Research and development expenditure for the six months ended 30 June 2021 was £36.91 million (30 June 2020: £4.47 million) as the Company advanced its Phase III clinical trial and scaled up its manufacturing activities
  • Administrative expenses for the six months ended 30 June 2021 were £1.99 million (30 June 2020: £0.60 million) as the Company built up its management infrastructure and invested in pre-commercialisation activities
• Research and Development tax credit increased from £1.11 million to £5.97 million with scale up of qualifying activities
• Cash balances of £46.21 million at 30 June 2021 (£10.88 million at 30 June 2020)

Results webcast details
A webcast will be hosted by Synairgen’s management team at 13:00 BST, followed by a Q&A for analysts.

The webcast link can be accessed here:
https://www.lsegissuerservices.com/spark/Synairgen/events/28f37f03-c7dd-4071-b047-66b191931742

To access details for the analyst Q&A, please contact: synairgen@consilium-comms.com

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No. 596/2014 (‘MAR’).

For further enquiries, please contact:

Synairgen plc
Richard Marsden, Chief Executive Officer
John Ward, Chief Financial Officer
Brooke Clarke, Head of Communications
Tel: + 44 (0) 23 8051 2800

finnCap (NOMAD and Joint Broker)
Geoff Nash, Kate Bannatyne, Charlie Beeson (Corporate Finance)
Alice Lane, Sunil de Silva (ECM)
Tel: + 44 (0) 20 7220 0500

Numis Securities Limited (Joint Broker)
James Black, Freddie Barnfield, Duncan Monteith
Tel: + 44 (0) 20 7260 1000

Consilium Strategic Communications (Financial Media and Investor Relations)
Mary-Jane Elliott, Jessica Hodgson, Lucy Featherstone
synairgen@consilium-comms.com
Tel: +44 (0) 20 3709 5700

MKC Strategies, LLC (US Media Relations)
Mary Conway
MConway@MKCStrategies.com
Tel: +1 516 606 6545

Notes for Editors

About Synairgen
Synairgen is a UK-based respiratory company focused on drug discovery, development and commercialisation. The Company’s primary focus is developing SNG001 (inhaled interferon beta) for the treatment of COVID-19 as potentially the first host-targeted broad-spectrum antiviral treatment delivered directly into the lungs. Granted Fast Track status from the US Food and Drug Administration (FDA) and deemed an Urgent Public Health study by the UK’s National Institute for Health Research (NIHR), Synairgen’s Phase III clinical programme is currently evaluating nebulised SNG001 in patients across 17 countries. In a Phase II trial in hospitalised COVID-19 patients, SNG001 demonstrated a greater than twofold chance of recovery to ‘no limitation of activities’ versus placebo.

Founded by University of Southampton Professors Sir Stephen Holgate, Donna Davies and Ratko Djukanovic in 2003, Synairgen is quoted on AIM (LSE: SNG). For more information about Synairgen, please see www.synairgen.com.

OPERATING REVIEW

Summary

For many years, Synairgen has been developing SNG001, an inhaled, broad-spectrum antiviral interferon beta (IFN-beta) formulation, which is delivered directly to the lower respiratory tract, stimulating the lungs’ immune defences. The Company continues to develop SNG001 for (i) COVID-19; (ii) future pandemic preparedness; and (iii) patients hospitalised with severe viral lung infections. Earlier work, establishing safety, dosing regimen, and patient selection has been instrumental in allowing Synairgen to make rapid progress during this pandemic.

During the first half of the year, Synairgen has focused on progressing the 610-patient global Phase III SPRINTER trial of SNG001 for the treatment of patients hospitalised with COVID-19. In parallel, the Company is building the infrastructure necessary to enable access to SNG001 in the US under a potential EUA for patients requiring hospitalisation due to COVID-19, followed by a Biologics Licence Application (BLA) and Marketing Authorisation Application (MAA) elsewhere. Positive data from this trial would represent a major breakthrough in the battle against COVID-19.

The clinical need for SNG001 in COVID-19

Despite the vaccination programme in the US, the number of patients being admitted to hospital remains significant. There are currently around 10,000 new patients hospitalised with COVID-19 each day, contributing to a shortage of available hospital capacity and poor outcomes for patients with other conditions.¹

While vaccines have done much to reduce the risks associated with COVID-19, there is growing evidence that protection from the virus afforded by vaccines is not comprehensive and may decline over time. Variant strains of SARS-CoV-2 also appear to pose varying degrees of risk to the efficacy of the currently approved vaccines. As evidence grows that vaccine efficacy may decline over time, the protocol of the SG018 trial was amended to include vaccinated individuals. Currently, where this amendment is approved, 25-30% of patients entering the trial are vaccinated.

Accordingly, the need for effective antiviral treatments for COVID-19 is clear.

There is an accumulating body of academic literature demonstrating the benefits of IFN-beta. Viruses, including coronaviruses such as SARS-CoV-2, have evolved mechanisms that evade the immune system. One of these mechanisms is the suppression of IFN-beta production by cells, IFN-beta being an essential driver of multiple antiviral defences. Suppression of IFN-beta in an organ such as the lungs gives an advantage to the virus, allowing it to replicate unhindered and spread through the lungs causing cell death and inflammation.

It has been shown in in vitro experiments that adding IFN-beta can upregulate antiviral responses in cells and protect against infection with a broad range of respiratory viruses, including SARS-CoV-2. Furthermore, individuals who produce less IFN-beta due to their genetic makeup or naturally-occurring antibodies against other interferons have been associated with a greater risk of developing severe viral lung illness. By administering IFN-beta protein directly into the airways via a nebuliser, the aim is to restore IFN-beta levels and to ‘switch on’ antiviral defences to clear the virus.

The challenge with IFN-beta has been delivering it in the right formulation, at the right dose, in the right patient, at the right time. Over the last 15 years Synairgen has:

• Developed a formulation containing IFN-beta protein delivered locally to the lungs through inhalation;
• Conducted multiple Phase I/II clinical trials in asthma, COPD, and COVID-19, totalling 339 patients who were treated with SNG001; and
• Demonstrated successful activation of antiviral activity in the lungs by observing biomarkers, efficacy signals in patients with lower respiratory illness, and a good tolerability profile.

When the COVID-19 pandemic started, a Phase II trial of SNG001 in hospitalised COVID-19 patients was initiated by the Company in March 2020. The data from this Phase II placebo-controlled study of 101 randomised COVID-19 hospitalised patients showed that SNG001 given for 14 days was associated with greater odds of improvement versus placebo on the WHO Ordinal Scale for Clinical Improvement (OSCI) and more rapid recovery to the point where patients were no longer limited in their activity, with a greater proportion of patients recovering during the 28-day study period.

Phase III SRINTER trial progress

The clinical trial team, working alongside Parexel, has gained trial approvals in 17 countries for SG018, and initiated over 100 trial sites. This activity, especially movement of trial supplies across borders, has been very challenging due to COVID-19-related restrictions. Despite this, the Company’s strategy of setting up trial sites in various countries has been successful. The first patients were recruited in January 2021 in the UK, and the trial is approaching 80% enrolment of patients out of the targeted 610. The Company anticipates the last patients will be entered into the trial during November 2021, and top line results are expected in early 2022.

Regulatory, distribution and in-market support (conditional on successful Phase III readout)

The Company is expediting preparations to file an Emergency Use Authorisation (EUA) in the US for patients requiring hospitalisation due to COVID-19, followed by a Biologics Licence Application (BLA) to enable commercial launch.

Synairgen has been awarded Fast Track status by the US FDA and is preparing for pre-submission meetings in the US and EU to confirm the contents of the marketing applications and plans to request expedited reviews.

Preparations are underway for distribution and in-market support activity such as pharmacovigilance, medical affairs to support health care professionals, and patient support programmes. The Company is negotiating with several organisations, all of whom have relevant experience dealing with COVID-19 and can provide these and other services to enable a successful launch.

Manufacturing

Manufacturing pharmaceutical products has been very challenging due to COVID-19, with shortages in key ingredients, components, equipment and manufacturing slots. Despite these challenges, during 2021, Synairgen has undertaken the following activities:

• Process qualification commercial scale manufacturing batches of the drug substance (the raw ingredient IFN-beta) have been made with our partner Akron Biotechnology;
• Drug product in pre-filled glass syringes (the finished format, ready-to-use) has been made in partnership with Catalent at commercial supportive scale;
• Completed a drug product manufacturing commercial scale batch (currently under testing) using polyethylener blow-fill-seal container technology to mitigate against the global supply chain shortages of medical grade glass and the reduction of available syringe filling manufacturing slots caused by the number of vaccines and therapeutics in development for COVID-19;
• Long term stability studies ongoing for both drug substance and drug product to support regulatory submissions; and
• Built inventory of certain specific long-lead time items needed to administer the drug to patients.

As a result, the Company expects to have tens of thousands of treatment courses available to the market should an EUA be granted. With government support, the Company has the potential to increase capacity to approximately 100,000 treatment courses per month.

Other in vitro and clinical progress – COVID-19

In vitro studies
SNG001 potently reduced virus to undetectable levels in cells infected with the ‘Wuhan-like’ Germany/BavPat1/2020 strain, and Alpha and Beta SARS-CoV-2 variants. Concentrations of IFN-beta, readily achievable in the lungs following inhaled delivery, that gave 99% inhibition (IC₉₉) were 9.5, 24.7 and 14.8 IU/mL respectively. Further research is underway to assess SNG001 against other variants.

SG016: Combined data from hospital and home cohorts
In April 2021, Synairgen published data from the home cohort of its SG016 Phase II trial of inhaled interferon beta in 120 COVID-19 patients.

Most of the home-initiated patients exhibited only mild disease which Synairgen believes compromised the possibility of showing treatment effects in this patient population. It was decided therefore to analyse the subset of patients with the most severe symptoms in a post-hoc analysis, including an analysis of the combined data from the home and hospital cohorts of the Phase II study. The analysis showed that the more breathless patients are significantly more likely (>3 fold) to recover on SNG001 than placebo, reinforcing our confidence in the design of the ongoing Phase III trial in hospitalised patients.

ACTIV-2 progress
This US National Institute of Health (NIH) Phase II/III ACTIV-2 study is led by the NIAID-funded AIDS Clinical Trials Group (ACTG). The trial is an adaptive, randomised, blinded, placebo-controlled trial which involved treating 110 patients with SNG001 in a home-based setting. Phase II is now completed, and a review is underway to determine whether SNG001 should be advanced into the Phase III part of the trial.  

Potential indications for the use of SNG001, beyond COVID-19

In addition to addressing the most pressing need for COVID-19 therapeutics, Synairgen believes there are two additional potential markets for SNG001: future pandemic preparedness and severe viral lung infections requiring hospitalisation.

Pandemic Preparedness
A positive result in the Phase III trial in COVID-19 patients would give strong support for the use of SNG001 as a broad-spectrum antiviral for future respiratory virus outbreaks or pandemics. With these characteristics, interested governments may consider SNG001 as a suitable option for stockpiling, providing enough treatment courses to protect a certain percentage of their population.

Severe viral lung infections requiring hospitalisation
Beyond COVID-19, there remains a significant need for a broad-spectrum antiviral to treat patients hospitalised due to chest infections caused by regular respiratory viruses such as influenza, adenovirus, parainfluenza virus, coronavirus, and rhinovirus (common cold). Indeed, collectively, these viruses are associated with approximately half of all ‘chest infection’ hospitalisations. Influenza is the most common cause, followed by RSV (one of the common cold viruses) in children.

In in vitro experiments, IFN-beta has demonstrated activity against all these viruses. Following a positive outcome from the Phase III trial in hospitalised COVID-19 patients, the Company will initiate a programme aimed at securing a marketing authorisation for SNG001 to be used as a broad-spectrum antiviral for patients admitted to hospital with severe viral lung infections.

Strengthening leadership team for the future

During 2021, the Company has made key hires in commercial, manufacturing, corporate affairs, and regulatory, and bolstered teams in the areas of clinical and quality, in advance of results from the ongoing Phase III trial.

This is part of our broader capability enhancement which, combined with significant support from a wider network of third-party providers, will provide a strong basis from which to apply for an EUA and subsequent BLA and MAAs, with a view to launching as soon possible if approvals are granted.  

Recent hires joining the management team include:

• Richard Hennings: Richard joined as Chief Commercial Officer in March 2021, having previously held commercial leadership roles at Gilead Sciences, Novartis and AstraZeneca.
• Richard Francis: Richard joined in September 2021 as Head of CMC, bringing more than 35 years’ experience in the development, regulatory approval and commercialization of many biopharmaceutical products including Cablivi®, Orthoclone OKT3®, Remicade®, and ReoPro®.
• Brooke Clarke: With more than 30 years of strategic communications and corporate affairs experience, including most recently leadership roles at Shire plc and Hikma plc, Brooke joined in September 2021 as Head of Communications.

FINANCIAL REVIEW

Statement of Comprehensive Income

The loss from operations for the six months ended 30 June 2021 (H1 2021) was £38.90 million (six months ended 30 June 2020 (H1 2020): £5.08 million loss; year ended 31 December 2020 (FY 2020): £17.74 million loss) with research and development expenditure amounting to £36.91 million (H1 2020: £4.47 million; FY 2020: £15.50 million) and other administrative expenses £1.99 million (H1 2020: £0.60 million; FY 2020: £2.25 million).

Research and development expenditure of £4.47 million in H1 2020 was focused on the Phase II SG016 hospital trial, increasing stocks of active and placebo syringes for future clinical trials and completing the SG015 COPD study. On the back of the successful results from the SG016 hospital study a fundraising was undertaken in October 2020 to enable progression into Phase III and scale up of manufacturing activities.

The most significant clinical expenditure in H1 2021 has been on the Phase III SPRINTER study, as discussed earlier in the report, with recruitment commencing in January 2021. The other items of clinical expenditure related to the SG016 home study, which completed during the period, and the ACTIV-2 trial.

The remainder of the research and development expenditure has been focussed on upscaling SNG001 manufacturing activities and procuring long lead time components. Drug substance manufacturing (with Akron Biotechnology) has completed Process Performance Qualification (PPQ) and a number of drug substance batches have been manufactured. Some of this drug substance has been shipped to Catalent for fill/finishing into glass syringes and PPQ batches have been manufactured. PPQ preparatory work has been undertaken by Woodstock Sterile Solutions for polyethylene blow-fill-seal containers. Investment has also been made into release assay development at a US-based supplier.

Other administrative expenditure has increased from £0.60 million in H1 2020 to £1.99 million in H1 2021 on account of (i) the establishment of a commercial team, which is preparing for SNG001 launch; (ii) the increase in finance and administration headcount to handle the higher volumes of activity; and (iii) higher investor relations activity costs.

The research and development tax credit increased from £1.11 million in H1 2020 to £5.97 million in H1 2021 on account of the increased qualifying expenditure.

The loss after tax for H1 2021 was £32.92 million (H1 2020: £3.96 million; FY 2020: £13.92 million) and the basic loss per share was 16.47p (H1 2020: 3.11p loss; FY 2020: 9.46p loss).

Statement of Financial Position and Cash Flows

At 30 June 2021, net assets amounted to £52.37 million (30 June 2020: £11.58 million, 31 December 2020: £85.14 million), including cash balances of £46.21 million (30 June 2020: £10.88 million, 31 December 2020: £74.98 million).

The principal elements for the £28.76 million decrease in cash balances during H1 2021 (H1 2020: £8.43 million increase, year ended 31 December 2020 (FY 2020): £72.52 million increase) were:

• Cash used in operations £28.67 million (H1 2020: £4.63 million outflow, FY 2020: £24.73 million outflow);
• Research and development tax credits received of £nil (H1 2020: £nil, FY 2020: £0.91 million);
• Share issue proceeds (net of costs) £nil (H1 2020: £13.22 million, FY 2020: £97.89 million); and
• Net settlement of options £nil (H1 2020: £nil, FY 2020: £1.29 million).

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

• Current tax receivable: 30 June 2021: £9.74 million, 30 June 2020 £1.98 million, 31 December 2020: £3.77 million, reflecting the higher research and development tax credits due;
• Trade and other receivables: 30 June 2021: £1.14 million, 30 June 2020: £0.38 million, 31 December 2020: £9.37 million. The 31 December 2020 balance included a number of manufacturing prepayments relating to drug substance manufacture, for which product was received during H1 2021; and
• Trade and other payables: 30 June 2021: £4.95 million, 30 June 2020: £1.98 million, 31 December 2020: £3.28 million, reflecting the increase in operating activities.

SUMMARY AND OUTLOOK

The SARS-CoV-2 virus remains a significant global threat. The potential for waning vaccine efficacy and the emergence of new SARS-CoV-2 variants highlights the urgent need for additional effective antiviral therapies. Most immediately, there is a significant need for a drug for the hospitalised patient at the time of admission that lowers the risk of further deterioration, reduces the duration of hospital stay, and enhances the chance of recovery following discharge.

Synairgen is focused on completing its 610 patient Phase III SPRINTER trial with top line data expected in early 2022. Positive results from this would mark a major breakthrough in the treatment of COVID-19, and a transitional milestone for Synairgen.

In the meantime, Synairgen is building capabilities in the areas of regulatory, manufacturing, supply chain, and in-market support.

Synairgen has been progressing SNG001 as a broad-spectrum antiviral for many years. The Company’s earlier work, establishing safety, dosing regimen, and patient selection has been instrumental in allowing it to make rapid progress during this pandemic and, whilst Synairgen waits for the results of the SPRINTER trial with confidence, it remains grateful to everyone who has continued to work tirelessly to advance the programme.

REFERENCES

1. Centers for Disease Control and Prevention. COVID Data Tracker Weekly Review. Accessed Sept 27, 2021. https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html

Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2021

		Unaudited Six months ended 30 June 2021	Unaudited Six months ended 30 June 2020	Audited Year ended 31 December 2020
	Notes	£000	£000	£000
Research and development expenditure		(36,906)	(4,474)	(15,495)
Other administrative expenses		(1,991)	(602)	(2,246)
Total administrative expenses and loss from operations		(38,897)	(5,076)	(17,741)
Finance income		9	9	19
Finance expense		(2)	(6)	(10)
Loss before tax		(38,890)	(5,073)	(17,732)
Tax credit	2	5,971	1,111	3,816
Loss and total comprehensive loss for the period		(32,919)	(3,962)	(13,916)
Loss per ordinary share	3
Basic and diluted loss per ordinary share (pence)		(16.47)p	(3.11)p	(9.46)p

Consolidated Statement of Changes in Equity (unaudited)
for the six months ended 30 June 2021

	Share capital	Share premium	Merger reserve	Retained deficit	Total
	£000	£000	£000	£000	£000
At 1 January 2020	1,094	28,262	483	(27,586)	2,253
Issue of ordinary shares	400	13,600	–	–	14,000
Transaction costs in respect of share issue	–	(782)	–	–	(782)
Recognition of share-based payments	–	–	–	67	67
Total comprehensive loss for the period	–	–	–	(3,962)	(3,962)
At 30 June 2020	1,494	41,080	483	(31,481)	11,576
Issue of ordinary shares	505	86,570	–	–	87,075
Transaction costs in respect of share issue	–	(2,405)	–	–	(2,405)
Recognition of share-based payments	–	–	–	140	140
Net settlement of share options	–	–	–	(1,291)	(1,291)
Total comprehensive loss for the period	–	–	–	(9,954)	(9,954)
At 31 December 2020	1,999	125,245	483	(42,586)	85,141
Recognition of share-based payments	–	–	–	148	148
Total comprehensive loss for the period	–	–	–	(32,919)	(32,919)
At 30 June 2021	1,999	125,245	483	(75,357)	52,370

Consolidated Statement of Financial Position
as at 30 June 2021

		Unaudited 30 June 2021	Unaudited 30 June 2020	Audited 31 December 2020
	Notes	£000	£000	£000
Assets
Non-current assets
Intangible assets		46	11	44
Property, plant and equipment		212	292	250
Right-of-use assets		13	175	94
		271	478	388
Current assets
Inventories		–	41	41
Current tax receivable		9,742	1,976	3,771
Trade and other receivables		1,137	383	9,372
Cash and cash equivalents		46,214	10,884	74,976
		57,093	13,284	88,160
Total assets		57,364	13,762	88,548
Liabilities
Non-current liabilities
Lease liabilities		–	(43)	–
Current liabilities
Trade and other payables		(4,948)	(1,978)	(3,279)
Lease liabilities		(46)	(165)	(128)
		(4,994)	(2,143)	(3,407)
Total liabilities		(4,994)	(2,186)	(3,407)
Total net assets		52,370	11,576	85,141
Equity
Capital and reserves attributable to equity holders of the parent
Share capital		1,999	1,494	1,999
Share premium		125,245	41,080	125,245
Merger reserve		483	483	483
Retained deficit		(75,357)	(31,481)	(42,586)
Total equity		52,370	11,576	85,141

Consolidated Statement of Cash Flows
for the six months ended 30 June 2021

	Unaudited Six months ended 30 June 2021	Unaudited Six months ended 30 June 2020	Audited Year ended 31 December 2020
	£000	£000	£000
Cash flows from operating activities
Loss before tax	(38,890)	(5,073)	(17,732)
Adjustments for:
Finance income	(9)	(9)	(19)
Finance expense	2	6	10
Depreciation of property, plant & equipment	45	45	90
Depreciation of right-of-use assets	81	81	161
Amortisation	5	5	9
Share-based payment charge	148	67	207
Cash flows from operations before changes in working capital	(38,618)	(4,878)	(17,274)
Decrease in inventories	41	–	–
Decrease/(Increase) in trade and other receivables	8,235	(243)	(9,244)
Increase in trade and other payables	1,669	488	1,789
Cash used in operations	(28,673)	(4,633)	(24,729)
Tax credit received	–	–	910
Net cash used in operating activities	(28,673)	(4,633)	(23,819)
Cash flows from investing activities
Interest received	10	7	31
Purchase of intangible assets	(7)	–	(37)
Purchase of property, plant and equipment	(7)	(36)	(39)
Net cash used in investing activities	(4)	(29)	(45)
Cash flows from financing activities
Proceeds from issuance of ordinary shares, gross	–	14,000	101,075
Transaction costs in respect of share issues	–	(782)	(3,187)
Net settlement of share options	–	–	(1,291)
Principal paid on lease liabilities	(83)	(123)	(196)
Interest paid on lease liabilities	(2)	(3)	(15)
Net cash (used in)/generated from financing activities	(85)	13,092	96,386
(Decrease)/Increase in cash and cash equivalents	(28,762)	8,430	72,522
Cash and cash equivalents at beginning of period	74,976	2,454	2,454
Cash and cash equivalents at end of period	46,214	10,884	74,976

Notes to the Interim Financial Information
for the six months ended 30 June 2021

1.        Basis of preparation

Basis of accounting

The interim financial information, which is unaudited, has been prepared on the basis of the accounting policies expected to apply for the financial year to 31 December 2021 and in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The accounting policies applied in the preparation of this interim financial information are consistent with those used in the financial statements for the year ended 31 December 2020.

The interim financial information does not include all of the information required for full annual financial statements and does not comply with all the disclosure requirements in IAS 34 ‘Interim Financial Reporting’.

Financial information
The financial information for the year ended 31 December 2020 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 December 2020 have been filed with the Registrar of Companies. The Independent Auditor’s Report on the Annual Report and Financial Statements for the year ended 31 December 2020 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Financial information is published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial information, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial information contained therein.

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, the manufacturing scale up and the commercialisation preparation activities.

The directors’ plans reflect their expected ability to complete the Phase III clinical trial, and certain manufacturing scale-up and commercialisation preparation activities utilising existing cash resources at the date of this report – should the Phase III clinical trial outcome be successful, the directors would seek to raise the further funding required to complete submissions of marketing authorisation applications and full commercialisation activities.

The current cash resources are sufficient to cover the above plans up to and including the read-out of the Phase III results and existing committed costs for the next twelve months to September 2022, regardless of the outcome of the currently ongoing Phase III trial.

After due consideration of these forecasts and current cash resources, the directors consider that the Group 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.

Approval of financial information
The 30 June 2021 interim financial information was approved by the Board of Directors on 29 September 2021.

                
Notes to the Interim Financial Information
for the six months ended 30 June 2021 (continued)

2.        Tax credit

The tax credit of £5,971,000 (six months ended 30 June 2020: £1,111,000; year ended 31 December 2020: £3,816,000) comprises an estimate of the research and development tax credit receivable in respect of the current period.

3.        Loss per ordinary share

	Unaudited) Six months) ended 30)         June) 2020)	Unaudited) Six months) ended 30) June) 2020)	Audited) Year) ended 31) December) 2020)
Loss attributable to equity holders of the Company (£000)	(32,919)	(3,962)	(13,916)
Weighted average number of ordinary shares in issue	199,914,402	127,318,567	147,120,120

The loss attributable to shareholders and the weighted average number of ordinary shares for the purposes of calculating the diluted loss 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. On 4 June 2021, 831,725 options were granted to employees. At 30 June 2021 there were 9,503,004 options outstanding (30 June 2020: 10,042,735 options outstanding; 31 December 2020: 8,671,279 options outstanding).

The movements on share capital and share premium were as follows:

	Number of shares	Ordinary shares of 1p each £000	Share) premium) £000)	Total) £000)
At 1 January 2020	109,433,442	1,094	28,262)	29,356)
Issue of ordinary shares	40,000,000	400	13,600)	14,000)
Costs of issue of shares	–	–	(782)	(782)
At 30 June 2020	149,433,442	1,494	41,080)	42,574)
Issue of ordinary shares	50,480,960	505	86,570)	87,075)
Costs of issue of shares	–	–	(2,405)	(2,405)
At 31 December 2020 and 30 June 2021	199,914,402	1,999	125,245	127,244

INDEPENDENT REVIEW REPORT TO SYNAIRGEN PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows and the related notes 1 to 3.  

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company’s annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’, issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP
Chartered Accountants
Reading
Date: 29 September 2021

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).