Richard Pye - Investor Relations Glyn Edwards - Chief Executive Officer Erik Ostrowski - Chief Financial Officer.

Chad Messer - Needham & Company Joseph Hedden - Rx Securities Sheena Berry - N+1.

Good day, ladies and gentleman and welcome to the Summit Therapeutics Plc Financial Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Richard Pye. Please go ahead, sir..

Thank you and welcome to everyone joining us on the call to discuss our financial results for the second quarter and half year ended July 31, 2017 and our operational progress. Earlier today, we issued a press release summarizing these results. If you have not had a chance to review, they are available on our website at www.summitplc.com.

Joining me on our call today are our Chief Executive Officer, Glyn Edwards; and our Chief Financial Officer, Erik Ostrowski. Before we begin our discussion, I would like to remind listeners that we will be making forward-looking statements during this call.

I refer you to our filings with the Securities and Exchange Commission for description of the risks and uncertainties associated with an investment in Summit Therapeutics. While we may elect to update these forward-looking statements at some points in the future, we specifically disclaim any obligation to do so, even if our views change.

These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. I would now like to turn the call over to Glyn for an overview of our corporate activities..

Great. Thanks, Richard and thank you all for joining us on the call today to discuss our achievements during the second quarter and the first half of our financial year. This year has been marked by strong focus on the advancement of ezutromid for the treatment of Duchenne muscular dystrophy, or DMD; and ridinilazole for the treatment of C.

diff infections, or CDI. Both of the drug candidates are at important stages of their clinical development with ezutromid progressing through a Phase 2 proof-of-concept trial and ridinilazole expected to start Phase 3 trials in the first half of 2018.

Before I review how we have set the stage for this exciting year 2018 that’s coming up, I would like to take a step back and remind you why we strongly believe that our DMD and CDI programs have the potential to improve the lives of patients, and I will start with Duchenne, DMD.

This is a rare genetic disease characterized as a progressive muscle wasting disorder that causes the loss of motor, pulmonary, and cardiac function and ultimately death by late 20s or early 30s. It’s caused by a variety of mutations in a single gene that encodes with the protein called dystrophin.

Dystrophin acts as a molecular shock absorber and in mature muscle fibers. Without it, muscle fibers can’t withstand the force of muscle contraction and therefore catastrophically fail.

Our bodies also produce a related protein called utrophin and this performs a similar function to dystrophin in developing muscle fibers and during the repair of damaged muscle fibers.

Patients with DMD are able to produce utrophin in a normal manner due to the damage that muscle fibers undergo and so they have a high amounts of utrophin present because of this damage. But as the fiber reaches maturity, utrophin is turned off and then dystrophin is supposed to take the place.

But unfortunately, in boys with Duchenne, the dystrophin doesn’t arrive.

So, our approach is to modulate the production of utrophin to keep it turned on, so they can potentially perform the shock absorbing role in a mature muscle fiber that is normally performed by dystrophin, and we believe that this approach has a distinct advantage over the other therapeutic approaches, because it has the potential to be disease modifying for all patients with Duchenne regardless of the underlying genetic fault in the dystrophin gene.

CDI in contrast is a widespread disease with more than 1 million cases in the U.S. and Europe combined each year. It’s a serious infection of the gut that can prove fatal with it being responsible for an estimated 29,000 deaths per year in the U.S. alone.

The vast majority of cases occur in patients who have a damaged gut microbiome often as a result of a broad spectrum antibiotic treatment for an unrelated infection. But the problem today is not only in treating the initial infection but also in reducing the risk of recurrent disease.

New patients have about a 25% chance of having a second episode of CDI. And this risk of recurrence rises to over 65% after two recurrences. Increasing risk is due to the use of broad spectrum antibiotics such as vancomycin and metronidazole that are currently used to treat CDI.

Metronidazole and vancomycin are both good at treating the initial infection, but have a broad spectrum of antibacterial activity and so they cause significant collateral damage to the gut microbiome leaving a patient highly susceptible to recurrent disease, and this is where we believe ridinilazole can have a major impact on patient outcomes.

It’s a highly selective and potent antibiotic that has been shown in clinical trials to treat the initial infection and also preserve the gut microbiome to reduce recurrent disease, and with this profile we believe ridinilazole has the potential to become a frontline CDI treatment option.

Both DMD and CDI programs are entering important stages of development. We have focused the first part of this year on building the foundations for what we anticipate will be an exciting 2018. For DMD, 2018 could provide us with the first human proof of concept data for our lead utrophin modulator ezutromid.

Ezutromid is in an ongoing Phase 2 trial called PhaseOut DMD. In this trial, we are dosing patients with DMD for 48 weeks and measuring the number of endpoints – I am sorry measuring a number of endpoints related to the mechanism of utrophin modulation, muscle health, and muscle function.

This trial is being conducted in 40 boys with DMD who are between 5-years-old and 10-years-old at enrollment. We expect two data readouts from PhaseOut DMD during 2018.

The first is the 24 week data point which is expected to include mechanistic data from muscle biopsies from approximately half the patients in the trial and muscle health and function data from all 40 patients in the trial, and we expect to report these interim results in the first quarter of 2018.

The second readout is the full 48 week trial result and that’s expected in the third quarter of 2018. Results are expected to include mechanistic data from the remainder of the patients and muscle health and function data from all 40 patients in the trial.

Data from the muscle biopsies remain a key focus for us and could help to answer whether ezutromid is able to modulate utrophin and changes the expression pattern from a patchy appearance seen in young in repairing muscle to one of more uniform appearance.

And we expect that the data will also help us to understand whether ezutromid has an effect on muscle regeneration, so that not only could we change where utrophin is expressed, but also when. The utrophin modulations have benefits to patients with Duchenne, we would anticipate seeing an increase in the number of mature muscle fibers too.

In May 2017, we completed enrollments into PhaseOut DMD. In addition to keeping us on track for the expected data readouts in 2018, this development milestone triggered a payment of $22 million under our exclusive license and collaboration agreement with Sarepta Therapeutics.

And Erik will review the impact of these payments on our financials later in the call.

Earlier in 2017, an independent data monitoring committee or DMC supported the extension of PhaseOut DMD beyond the 48 weeks of dosing, and we plan to continue dosing patients in the trial past the initial 48 weeks until ezutromid is either approved or discontinued. The DMC support was based on the safety profile of ezutromid in the trial thus far.

The extension phase will allow us to continue to gather important safety and efficacy data in support of a potential future regulatory filing. Now, I would like to turn to CDI where we are continuing proprietory activities for ridinilazole to enter Phase 3 clinical trials, which are planned to initiate in the first half of next year.

In February 2017, we announced the design of the two Phase 3 trials following input from the FDA and EMA. And as a remainder, ridinilazole achieved impressive results in the Phase 2 CoDIFy trial.

In this trial, ridinilazole demonstrated statistical superiority over the standard-of-care antibiotic vancomycin in the endpoint of sustained clinical response and measured combining both cure and recurrent disease.

Further, the trial provided evidence of ridinilazole’s high selectivity by preserving the gut microbiome in contrast to vancomycin, where gut microbiome damage was widespread and long-lasting.

In our Phase 3 clinical trial design, we are looking to replicate the Phase 2 trial design by testing for superiority over vancomycin in sustained clinical response. We also evaluate several important health economic outcome measures that we believe are critical to commercial success.

We continue to explore all of our options to maximize the value of ridinilazole for our shareholders, including potentially entering into a collaboration with third-party or securing meaningful non-dilutive funding from government entities and philanthropic and non-government and not-for-profit organizations.

And we are confident that the preclinical and clinical data today makes ridinilazole a highly attractive asset and look forward to the funding being put in place and the Phase 3 program, which we anticipate starting in the first half of 2018.

Finally, underpinning a great foundation for both programs is the high-caliber team to which we have made several key additions during the first half of this year. One of the key appointments, including Dr.

David Roblin joining us in April 2017 as Chief Operating Officer and President of Research and Development and he added the responsibility of Chief Medical Officer in May.

He brings to the team a successful 25 years in the biopharmaceutical industry, including senior leadership roles at Pfizer and Bayer, which involved overseeing the research, development and commercial launch of drugs across several therapy areas, including infectious diseases.

I would now like to turn the call over to Erik who will discuss the financial results in more detail.

Erik?.

Thank you, Glyn. I will now provide an overview of our financial results for the second quarter ended July 31, 2017. We present Summit’s results in accordance with International Financial Reporting Standards in pound sterling, but for convenience purposes, I’ll give U.S. dollar equivalents for certain key numbers.

As we described in our earnings release today, at July 31, 2017, we had cash and cash equivalents of £28.3 million or $37.3 million compared to £28.1 million at January 31, 2017.

Of note, as Glyn mentioned, during the second quarter we received a $20 million or a £17.2 million development milestone payment pursuant to our license and collaboration agreement with Sarepta Therapeutics. This milestone payment was triggered upon the first dosing of the last patient in our ongoing phase-out DMD trial.

We reported a profit for the second quarter ended July 31, 2017 of £10.9 million or $14.4 million driven by the receipt of this milestone payment as compared to a loss of £6.4 million during the second quarter of 2016. Revenue was £18.9 million for the second quarter ended July 31, 2017.

This figure is comprised of two components, the first being the £17.2 million milestone payment, which was recognized as revenue in full during the quarter and the second being £1.7 million related to the $40 million or £32.8 million upfront payment that we received when we entered into the license and collaboration agreement with Sarepta in October of 2016, which we are recognizing ratably over time.

Research and development expenses increased to £6.6 million or $8.7 million for the second quarter ended July 31, 2017 from £5.4 million for the second quarter of 2016.

This increase reflects a greater investment in the DMD program and an increase in research and development related staffing costs offset by a decrease in CDI clinical program related activities.

General and administration expenses increased to £2.5 million or $3.3 million for the second quarter ended July 31, 2017 from £1.9 million for the second quarter of 2016. This increase was primarily due to a negative movement in exchange rate variance and an increase in staff-related costs offset by a decrease in legal and professional fees.

We believe our cash on hand will allow us to fund our key program initiatives through December 31, 2018 not inclusive of the cost of the Phase 3 clinical trials for the CDI program, which as Glyn mentioned, we aim to commence in the first half of 2018. I will now turn the call back over to Glyn for closing remarks.

Glyn?.

Thanks, Erik. We are continuing to execute our strategy for both programs and ensuring we have the right team in place as we stand poised to make a difference to the lives of patients with DMD and CDI in the coming years. So, now I would like to open the line for questions..

Thank you very much, sir. [Operator Instructions] We will now take our first question from Chad Messer from Needham & Company. Please go ahead..

Great. Thanks for taking my question and for the update.

Maybe just on the upcoming Phase 2 -- exploratory Phase 2against fidaxomicin, can you frame for us what we should be looking for in that data, you have talked about it a little bit in your press release, but just could you set expectations for what we would see?.

Thanks Chad. Good question. So this was an exploratory study and our real focus in this study is it’s a comparative microbiome study.

So what we are really looking to explore here is in real patients what is the state of the microbiome on entry into the study and then how does that change during treatment and after treatment with ridinilazole and looking how it’s changes during treatment and after treatment with fidaxomicin.

It’s a small study and so it’s not powered or in any way designed for efficacy endpoints although we will have measured those and those will be published.

But the prime focus is on what happens to the microbiome, and in addition to the microbiome measurements and the efficacy measurements, obviously you are always looking at the safety profile of a new treatment, so we will also be gathering and publishing further safety information on ridinilazole..

So when you say effect on the microbiome, is that sort of like the cladograms that we saw from the study versus vanco and if so do we know how fidaxomicin behaves in studies like that?.

This – we have -- obviously the group that’s done the most detailed microbiome analysis of the effect of various antibiotics on patients to-date, primarily with CoDIFy study on looking at vancomycin and then ridinilazole, there have been not so much microbiome studies published on fidaxomicin, but microbiology studies looking at different species in different families, and what you see there is that fidaxomicin is more selective than vancomycin as you would expect, but ridinilazole is even more selective than fidaxomicin, so the hypothesis before we get data is that from microbiology sort of test tube experiments or petri dish experiments, you would expect to see that ridinilazole is even more selective than fidaxomicin, but obviously in real patients it may be different.

And so, this study is our chance to see how the two drugs compare in their effect on the microbiome in comprehensive state-of-the-art microbiome study..

And then maybe just a quick bigger picture one on ezutromid and if I may now that we are a couple of quarters into the EXONDYS launch, anything sort of anecdotal that you can report in terms of excitement for your own program, any sort of the changes out there now, but now that there is finally treatments available for some of these patients?.

I don’t think we have detected any changes relative to us, because we have always had a large number of incoming calls from [indiscernible] wanting their children to get access to ezutromid through the trial program or through compassionate use, yet we don’t have the compassionate use program.

So the weight of those calls continues and there continues to be huge interest in ezutromid because even within Europe, the PTC drug in the U.S. with EXONDYS, those only are suitable for a small proportion of patients. And so for the vast majority of patients, ezutromid is the most advanced treatment option.

But I mean, I am not qualified to say it, but certainly our interaction with the physicians who are treating DMD patients is they are pretty excited by EXONDYS 51 and there is a treatment option available. So, I think it’s Sarepta and Exondys has been great news for those patients with the relevant mutation, but for the vast majority of patients.

The excitement continues to be for ezutromid..

Great. I’m certainly looking forward to the data in first quarter..

Thanks, Chad..

We will now take our next question from Hartaj Singh from Oppenheimer. Please go ahead..

Hi, Glyn. Good morning. This is Emma on for Hartaj.

So assuming we see a clear positive thing in the biopsies at 24 weeks, is there any potential to initiate Phase 3 discussions without leading to that 48-week data or I guess could you just walk us sort of a best case development pipeline?.

Yes. So, thanks a lot, Emma and thanks for explaining the voice change from Hartaj. So, yes, we see this as two bites at the cherry and that if we see good strong data on the 24-week data that would be enough to initiate the registration studies.

And obviously, if we saw less strong data than that, we would wait till the 48-week data before kicking off registration study. So, we have plans for both eventualities.

And our expectation is that, yes, and a further study would be required for approval, and that that would be a randomized study with a placebo arm and that the primary endpoint would be something – the information that we get from this current study on a surrogate endpoint for instance, utrophin or muscle fiber maturity or MRI or one of those things.

And our expectation is that just a single registration study would be required. It’s difficult for us to confirm the size of that study, but our estimates are that it reached somewhere around 150 patients of that order if we are going for surrogate endpoint.

Now, obviously all this depends on what data we see and if we see exciting and strong data also on the functional endpoints, then that might change the design of the registration study.

But our expectation is from our PhaseOut DMD study, it was really focused on surrogate endpoints that the selection of patients and the study design is not optimal for functional endpoints and so our plans at the moment are that most likely success is to be seen through the biomarkers, through MRI and that the registration study would be focused on those endpoints..

Great. Thank you so much..

We will now take our next question from Liisa Bayko from JMP Securities. Please go ahead..

This is John on for Liisa. Thanks for taking the question and the update.

Just a couple of short ones, can you remind us the breakdown of the formulations that will be available for the first quarter readout and which partial endpoints do you expect to kind of correlate best if we do see an increase in ezutromid?.

Thanks, John. Thanks for your questions. So, we recruited 40 boys into the PhaseOut DMD study, 30 of those received the formulation that we called F3 and 10 of them received the sprayed right formulation that we call F6 and so approximately half of both groups will be reporting biopsy data.

So, that’s approximately 15 of the F3 and approximately 5 of the year the F6, but obviously the other surrogate endpoints like MRI, those are in the entire population. So, we will have those 40 boys at 24 weeks. I am sorry with my concentrating announcing the first part of your question I have completely forgotten the second part..

No worries.

I am wondering if we see an increase in ezutromid, what functional endpoints that you are evaluating expect do you show a clear effect?.

Yes. I think we are looking at a whole number of things. And I think the ones where if there is an effect, we expect to see are going to be those that are most closely related to those where we have seen effects in the prior animal studies.

And so in prior animal studies, we have seen changes to the utrophin levels, both the quantity and more particularly the distribution. So, those are the areas that we have the highest confidence in. Second highest confidence is in muscle fiber maturity. So again, in the mouse models, the measure of muscle fiber maturity is different.

So, in mouse models, you see changes in what I called centrally nucleated fibers and the most equivalent human endpoint in our phase-out study is going to be looking at the developmental myosin.

And so we have a measure of muscle fiber maturity it’s not exactly the same, but again we have got pretty high confidence that if the drug is having an effect, we will see a change in muscle fiber maturity and that’s the measure. And then when we get to MRI, we have not – it’s not been widely used that will let us huge excitement about it.

And so MRI can be used to measure fraction, which is the primary endpoint, but also the level of inflammation and there have been several studies in DMD with other therapies or natural history studies looking at the effect of steroids that have seen effects there, but I think that has – that’s less of an experimental sort of line of sights to this study.

So, I think – so the priorities in terms of my confidence if the drug works, first utrophin and second, muscle fiber maturity and then third, the MRI measures, but the great thing about doing experimental biology and translational medicine is the data will be what the data will be and we are hugely excited to be getting this data early next year.

And we have talked just about a few of the measures, but there is a lot of other measures going on here. And I guess the thing that would give us the most confidence is if we saw not just changes in one measure, but we saw a level of consistency across various measures..

And one last one from me, are there any milestone from Sarepta tied to either the interim or the final data and if so are those included in kind of your expectations for cash burn?.

No, we are super cautious on something about Erik’s cultural indoctrination of us. So, we don’t include any of these additional milestones in our cash projections. I will get Erik to come in a minute to say how that’s looking.

And there is no milestone related directly to the interim look, but obviously success in the interim look accelerates the program brings the development program forward with higher chance of success. And so it will bring close those future development and regulatory milestones.

So, there is nothing directly tied to PhaseOut DMD, but obviously success in that brings the next stages of the program there and with more certainty and that obviously has an impact on our chances of receiving those payments.

Erik, you want to say a bit about the cash flow?.

Yes. I guess reiterating what Glyn said in terms of any other milestone payments be including in that cash guidance.

What’s been disclosed publicly around ezutromid related development milestones is that a total $42 million and the only specificity that we provided publicly on that $42 million is that there is $22 million related to the milestone that we achieved over the most recent quarter..

Great. Thanks again..

We will now take our next question from Joseph Hedden from Rx Securities. Please go ahead..

Hi there. Thank you for taking my question. Just one on finance piece and then another on ridinilazole if I may. As far as OpEx is concerned, I am appreciating that costs are ramping as ezutromid program goes on, but they are still slightly ahead of where we are thinking, can you possibly give us a guide as to what your second half spend might be.

And then on ridinilazole thinking about the trial versus fidaxomicin and the exploratory end point data there and got microbiome exploratory data, is there anyway, are you thinking of can you build that meaningfully into clinical endpoint into the Phase 3 trials, registration trials planned for the first half of 2018 or have you had any discussion with regulators as to whether any of that data might be useful in a discussion to support registration? Thanks..

So I will answer the second part of that question and Erik will shortly answer the cash guidance and cost guidance question. So the answer is yes, we will be doing microbiome measurements in the Phase 3 study, but not on every patient.

The Phase 2 study against vancomycin we looked at 100 patients, we have looked at 30 patients in the trial against fidaxomicin. The two Phase 3 trials are over 700 patients each. And we have already conducted the biggest microbiome study that would be overkill.

But I think the key to approval is quite brutal in Phase 3 studies, it’s actually the clinical data for antibiotics. So approval will be driven by how we do in sustained clinical response. We are looking for superiority and we powered the study for superiority.

But the reason why we have included microbiome measures in the Phase 3 is really for marketing and more sort of science based to encourage take up of the drug if we do meet the primary endpoints.

And that the more coherent story that you have about the mechanism of action of the drug, the potency of the drug, the reasons for its success in changing the – and improving the outcomes from a recurrence point of view the better we think we will be able to build take up over a new antibiotic.

And if you look at one of the main drawbacks or the main hindrance is to rapid take-up of new antibiotics in the past is being that from an antimicrobial resistance point of view the best thing from society’s point of view is to keep new antibiotics and only use it resistant cases.

That actually gets turned on its head once you have highly selective antibiotics in that with a highly selective antibody you do not want to be using vancomycin, which is broad spectrum and use systemically in some really nasty systemic infection, you don’t want to be using in the gut infection.

And so actually that the experts agree that if you have got something very narrow spectrum then that should be moving to first line and these valuable broad spectrum drugs like vancomycin and metronidazole should be kept back for those serious infections.

And so it’s really important to build on the data supporting your selectivity if you want to drive a change in the treatment. So – and our objective and our belief is that we can very quickly get ridinilazole to become the standard of care in the first and second line treatment of CDI.

So has long-winded way of starting off with a positive, yes we are measuring it, but actually it’s not going to help so much the regulatory approval, but it will help drive sales and market penetration..

Yes. And I guess to the second component of your questions on financials, the trend you have seen over the past couple of quarters has been DMD program expense increasing particularly as we conduct the PhaseOut DMD study.

We had the microbiome related study Glyn discussed earlier ongoing, now if that trial winding down those CDI costs obviously go down, offset somewhat by some of the Phase 3 prep work that we are doing on the C. diff site though mainly CMC related activities. So you are not talking significant dollars there.

And then turning back to my runway guidance through December ‘18, recall that we are not including in that guidance any of the Phase 3 clinical study expenses, hopefully that will help..

Okay, that’s great. Thank you..

We will now take the next question from Sheena Berry from N+1. Please go ahead..

Hello, I am just wondering obviously you crossed earlier stage, if you are able to provide an updated color on the future generation utrophin modulation pipeline and progress there and if you – if they aren’t in a position to update now, when we might expect [indiscernible]?.

Hi Sheena. Thanks for that. We continued to invest pretty heavily in the next generation of utrophin modulators in our collaboration with Oxford and there has been quite a lot of progress that we are hugely excited by and that.

But we are not updating any – with any new data today on that and we plan to make announcements at scientific conferences both ourselves and through the team at Oxford. So apart from some warm words that progress continues I have got nothing new to add to it today.

The scientific conference season tends to be the next part of the year coming up and into the spring. So if there are going to be any presentations, it’s going to be in the next six months. I think from a value driving point of view the key components we have really are the ezutromid program and the ridinilazole program..

Yes of course and obviously a lot to explore to..

[Operator Instructions] We will now take the next question from [indiscernible]. Please go ahead..

Hi, thanks. So my question is on the C.

diff program, can you tell us the expected cost of the Phase 3 trials?.

Yes, thanks for [indiscernible] of this. Yes, so one of the elephants in the room has been that the Phase 3 trials for ridinilazole going to be substantially more than would be for an orphan indication like the Duchenne.

And so the guidance we have given is that to do both Phase 3 studies is going to be something of the order of $100 million and that’s why we have been indicating for some time that announcing how that’s going to be financed is going to be a key announcement before we actually start the Phase 3 trials.

But we have been working on a number of strands for this for some time. And as we said in the prepared statement earlier that could involve a partnership. But there is also quite a lot of less dilutive funding available from governments and from the philanthropic world for novel antibiotics.

And so we want to find out if we can get this non-dilutive funding and exactly how much before we make our decisions on partnership income.

But you can tell from the very positive comments we have made that we expect to start Phase 3 trials on-time at the beginning of 2018 that we remain confident to be making announcements about the funding of the Phase 3 program in the not too distant future..

Alright. I look forward to that. Thank you very much..

As there were no further questions in the telephone queue, I will now turn the call back to our speakers for any additional remarks..

Yes, thanks very much for the questions guys. That’s really helpful and thank you all for joining us today. We look forward to providing with updates on the program, including updates on the funding of the C. diff. And then as we look into 2018, there is going to be a ramp of really exciting clinical data.

So, I think if you look back over the last 12 months, Summit has made huge progress and we are poised for a hugely exciting 12 months coming up. So, I look forward to more of these goals. Thanks a lot..

Ladies and gentlemen, this concludes the Summit Therapeutics Plc financial conference call. Thank you all for your participation today. You may now disconnect..