What changed in this filing

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Item 9A. Controls and Procedures

2022-03-17 compared with 2021-03-31 · 807 added, 663 removed, 537 unchanged (73% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) under the supervision and the participation of the company’s management, which is responsible for the management of the internal controls, and which includes our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer).

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) under the supervision and the participation of the company’s management, which is responsible for the management of the internal controls, and which includes our Chief Executive Officer (our Principal Executive Officer and Principal Financial Officer).

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

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Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon our evaluation of our disclosure controls and procedures as o f December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

Based upon our evaluation of our disclosure controls and procedures as o f December 31, 2021, our Chief Executive Officer (our Principal Executive Officer and Principal Financial Officer) concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

Management's Report on Internal Control Over Financial Reporting and Attestation Report of Registered Public Accounting Firm

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is a process designed, under the supervision of the Chief Executive Officer (our principal executive officer) and the Chief Financial Officer (our principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP.

Our internal control over financial reporting is a process designed, under the supervision of the Chief Executive Officer (our Principal Executive Officer and Principal Financial Officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with Generally Accepted Accounting Principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.

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Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred after the fiscal year ended December 31, 2020 , and through the date of this Report, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

The Compensation Committee of the Company’s Board of Directors reviewed and approved employee 2021 bonuses.

A discretionary cash bonus of $182,250 is scheduled to be paid to Maky Zanganeh, the Company’s Chief Operations Officer, on March 25, 2022.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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Financial Statements

As part of this Report, the consolidated financial statements are listed in the accompanying index to financial statements on page F-1.

As part of this Report, the consolidated financial statements are listed in the accompanying index to financial statements on page 91 .

(2) Financial Statement Schedules

3 unchanged sentences

001-36866), filed with the Securities and Exchange Commission on July 27, 2020)

3.1 Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 8-K (File No.

3.1 Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020 )

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Report on Form 8-K (File No.

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

4 unchanged sentences

001-36866), filed with the Securities and Exchange Commission on September 29, 2020)

4.3 Form of Consultant Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Report on Form 8-K (File No.

4.3 Form of Consultant Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

4.4 Form of Investor Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Report on Form 8-K (File No.

4.4 Form of Investor Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

3 unchanged sentences

001-36866), filed with the Securities and Exchange Commission on November 6, 2020)

4.7 Form of Subscription Rights Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on April 21, 2021)

10.1† Translation Award Funding Agreement, entered into as of October 19, 2012, by and between the Wellcome Trust Limited and Summit Therapeutics plc (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-1 (File No.

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10.28# Form of Indemnification Agreement between Summit Therapeutics Inc.

and each of its Executive Officers and Directors (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K (File No.

and each of its Executive Officers and Directors (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

5 unchanged sentences

001-36866), filed with the Securities and Exchange Commission on September 29, 2020)

10.31# 2020 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K (File No.

10.31# 2020 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

3 unchanged sentences

001-36866), filed with the Securities and Exchange Commission on September 29, 2020)

10.34# 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to the Company’s Report on Form 8-K (File No.

10.34# 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on September 18, 2020)

10.35 Contract of Employment, dated November 22, 2020, by and between Summit Therapeutics Inc.

and Mahkam Zanganeh

and Mahkam Zanganeh (incorporated by reference to Exhibit 10.35 to the Company's Annual Report on Form 10-K (File No.

001-36866), filed with the Securities and Exchange Commission on March 31, 2021)

10.36 Sublease Agreement, dated March 26, 2021, by and between Maky Zanganeh & Associates Inc.

and Summit Therapeutics Sub Inc.

(incorporated by reference to Exhibit 10.36 to the Company's Annual Report on Form 10-K (File No.

001-36866), filed with the Securities and Exchange Commission on March 31, 2021)

10.37 Exit Agreement, dated May 28, 2021, by and between Summit Therapeutics Inc.

and Michael Donaldson (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on May 28, 2021)

10.38(1) Note Purchase Agreement, dated March 10, 2022, by and between Summit Therapeutics Inc.

and Robert W.

Duggan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No.

Duggan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File.

001-36866), filed with the Securities and Exchange Commission on March 11, 2022)

10.38 Promissory Note , dated March 24, 2021, issued by Summit Therapeutics Inc.

in the name of Robert W.

Duggan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No.

10.39 Promissory Note, dated March 10, 2022, in the name of Robert W.

Duggan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File.

001-36866), filed with the Securities and Exchange Commission on March 11, 2022)

16.1 Letter from PwC to the Securities and Exchange Commission, dated May 26, 2021 (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K (File No.

001-36866), filed with the Securities and Exchange Commission on May 26, 2021)

21.1* List of Significant Subsidiaries

23.1* Consent of PricewaterhouseCoopers LLP

23.1* Consent of PricewaterhouseCoopers LLP, a Delaware limited liability partnership

23.2* Consent of PricewaterhouseCoopers LLP, a United Kingdom entity

31.1* Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002

32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.

32.1* Certification pursuant to 18 U.S.C.

§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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/s/ Robert W.

Chief Executive Officer;

Executive Chairman

Chief Executive Officer and Executive Chairman;

Principal Executive Officer and Principal Financial Officer

March 17, 2022

2 unchanged sentences

/s/ Robert W.

Duggan Chief Executive Officer and Executive Chairman ( Principal Executive Officer)

March 31, 2021

/s/ Michael Donaldson Chief Financial Officer

(Principal Financial and Accounting Officer)

March 31, 2021

Michael Donaldson

/s/ Mahkam Zanganeh Director March 31, 2021

Duggan Chief Executive Officer and Executive Chairman;

Principal Executive Officer and Principal Financial Officer March 17, 2022

/s/ Mahkam Zanganeh Chief Operations Officer and Director March 17, 2022

Mahkam Zanganeh

/s/ Rainer Erdtmann Director March 31, 2021

Rainer Erdtmann

/s/ Kenneth Clark Director March 17, 2022

Kenneth Clark

/s/ Urte Gayko Director March 17, 2022

/s/ Ujwala Mahatme Director March 17, 2022

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/s/ Manmeet Soni Director March 17, 2022

/s/ Michael Wang Director March 31, 2021

Michael (Luhua) Wang

Summit Therapeutics Inc.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

Index to the Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 876 )

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive (Loss)/Income

Consolidated Statements of Stockholders' Equity ( D eficit)

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Summit Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and December 31, 2019, and the related consolidated Statements of Operations and Comprehensive (Loss) Income, of Stockholders' Equity (Deficit) and of Cash Flows for the year ended December 31, 2020, the eleven month period ended December 31, 2019 and fiscal year ended January 31, 2019 including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and December 31, 2019 , and the results of its operations and its cash flows for the year ended December 31, 2020, the eleven month period ended December 31, 2019 and fiscal year ended January 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Summit Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 3 to the consolidated financial statements, the Company will require additional financing to fund its ongoing operations.

Management’s evaluation of the events and conditions and management’s plans to mitigate this matter is also described in Note 3.

Critical Audit Matters

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Accrued and Prepaid Research and Development Costs

As described in Notes 3 and 14 to the consolidated financial statements, the Company has entered into various research and development contracts with other companies.

These agreements are generally cancellable, and related payments are recorded as research and development expenses as incurred.

The Company records accruals for estimated ongoing research and development costs or prepaid expenses where the payments made exceeds the estimated costs.

Included within prepaid expenses at December 31, 2020, is $8.5 million of prepayments relating to research and development expenditure.

Included within accrued liabilities at December 31, 2020 is $1.5 million relating to research and development expenditure.

These amounts are determined based on the estimated costs to complete each study or activity, the estimation of the current stage of completion and the invoices received, as well as predetermined milestones which are not reflective of the current stage of development for prepaid expenses.

As described in Notes 4 and 14 to the consolidated financial statements, included within prepaid expenses as of December 31, 2021 is $6.1 million of prepayments relating to research and development expenditures.

Included within accrued liabilities as of December 31, 2021 is $5.2 million relating to research and development expenditures.

The Company records accruals for estimated ongoing research and development costs or prepaid expenses where the payments made exceed the estimated costs.

These amounts are determined by management based on the estimated costs to complete each study or activity, the estimation of the current stage of completion and the invoices received, as well as predetermined milestones which are not reflective of the current stage of development for prepaid expenses.

However, prepaid expenses decrease, and accrued liabilities increase as the activities progress, and if actual costs incurred exceed the prepaid expense, an accrual will be recorded for the liability.

The key sensitivity is the estimated current stage of completion of each study or activity, which is based on information received from the supplier and the Company’s operational knowledge of the work completed under those contracts.

The principal considerations for our determination that performing procedures relating to accrued and prepaid research and development costs is a critical audit matter is (i) the significant judgment by management in determining the prepaid or accrued costs and (ii) high degree of auditor judgment and subjectivity and effort in performing procedures and evaluating audit evidence for these accrued or prepaid costs and the factors related to progress towards or the estimated current stage of completion of the research and development activities or studies, invoicing to date under the contracts, and communications from the research institution, or other companies, of any actual costs incurred during the period that have not yet been invoiced.

The key sensitivity is the estimated current stage of completion of each study or activity, which is based on information received from the supplier and management’s operational knowledge of the work completed under those contracts.

The principal considerations for our determination that performing procedures relating to accrued and prepaid research and development costs is a critical audit matter are the significant judgment by management when determining the estimated research and development costs, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to estimated current stage of completion of each study or activity.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, (i) evaluating the appropriateness of the method used by management to develop the estimates, (ii) testing the completeness and accuracy of the data inputs to the estimates, including total costs included within executed contracts and actual billed expenses under these contracts and the mathematical accuracy of the accrued expense calculation (iii) evaluating the reasonableness of the assumptions used in developing the estimates (including the progress towards completion of specific tasks and the associated cost incurred for services the Company has not yet been invoiced or otherwise notified of the actual cost at period end) by obtaining external confirmation with significant contract research organizations to confirm the costs incurred to date on purchase orders and total amount of invoices raised, and (iv) considered whether evidence contained was consistent with understanding obtained through discussion with the research and development team.

These procedures included, among others, (i) evaluating management’s process on a sample basis for determining the current stage of completion of each study or activity;

(ii) reading a sample of research and development contracts;

(iii) evaluating the reasonableness of progress towards completion for a sample of research and development activities and the associated incurred cost based on invoices, external confirmations or other information received from the supplier;

and (iv) testing the completeness and accuracy of the underlying data including total costs included within contracts and actual billed amounts for a sample of contracts.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 17, 2022

We have served as the Company’s auditor since 2021.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Summit Therapeutics Inc.

Opinion on Financial Statements

We have audited the consolidated balance sheet of Summit Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2020, and the related Consolidated Statements of Operations and Comprehensive Loss, of Stockholders' Equity and of Cash Flows for the year ended December 31, 2020 including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Reading, United Kingdom

March 17, 2022

We have served as the Company's or its predecessor’s auditor since 2013.

We served as the Company's auditor from 2013 to 2020.

Summit Therapeutics Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(in thousands, except share and per share data)

December 31, 2021 December 31, 2020

Current assets:

Cash and cash equivalents $ 66,417 $ 63,842

Accounts and other receivable 331 541

Cash $ 71,791 $ 66,417

Accounts receivable 1,464 331

Prepaid expenses 7,161 9,547

2 unchanged sentences

Total current assets 97,312 87,674

Non-current assets:

Property and equipment, net 694 725

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Intangible assets, net 10,399 11,515

Other assets 170 —

Total assets $ 113,374 $ 102,498

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Accrued liabilities 7,197 3,278

Other current liabilities 729 366

Accrued compensation 4,125 983

Lease liabilities 1,091 390

Deferred revenue and income 8,370 2,615

Contingent consideration — 105

Deferred revenue and other income 7,939 8,370

Other current liabilities 897 729

Total current liabilities 25,623 19,890

Non-current liabilities

Deferred revenue and income 569 493

Lease liabilities 75 422

Lease liabilities, net of current portion 1,691 75

Deferred revenue and other income, net of current portion — 569

Other non-current liabilities 2,776 2,511

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98,039,540 and 82,575,064 shares issued and outstanding at

December 31, 2020 and December 31, 2019, respectively

December 31, 2021 and 2020, respectively

Additional paid-in capital 384,049 293,367

3 unchanged sentences

Total liabilities and stockholders' equity $ 113,374 $ 102,498

The accompanying notes form an integral part of these Consolidated Financial Statements.

The accompanying notes are an integral part of the consolidated financial statements

Summit Therapeutics Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands, except share and per share amounts)

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

Year Ended December 31, 2021 Year Ended December 31, 2020

Revenue $ 1,809 $ 860

2 unchanged sentences

General and administrative 23,611 19,232

Impairment of goodwill and intangible assets 859 — 5,290

Impairment of intangible assets — 859

Total operating expenses 108,963 73,365

Other operating income 20,968 19,312

(Loss) income from operations ( 53,193 ) ( 27,473 ) 5,389

Other income (expense), net 283 ( 1,618 ) 3,694

(Loss) income before income taxes ( 52,910 ) ( 29,091 ) 9,083

Benefit (charge) from income taxes 213 ( 36 ) 1,786

Net (loss) income $ ( 52,697 ) $ ( 29,127 ) $ 10,869

(Loss) earnings per share:

Basic ( 0.76 ) ( 0.89 ) 0.63

Diluted ( 0.76 ) ( 0.89 ) 0.63

Weighted-average shares used to compute (loss) earnings per share:

Basic 69,524,148 32,829,003 17,140,494

Diluted 69,524,148 32,829,003 17,228,718

Operating loss ( 86,186 ) ( 53,193 )

Other (expense) income, net ( 2,416 ) 283

Loss before income tax ( 88,602 ) ( 52,910 )

Income tax benefit — 213

Net loss $ ( 88,602 ) $ ( 52,697 )

Net loss per share:

Basic and diluted $ ( 0.96 ) $ ( 0.76 )

Weighted average common shares outstanding:

Basic and diluted 92,239,306 69,524,148

Other comprehensive (loss) income:

Change in foreign currency translation adjustment 970 51 ( 496 )

Comprehensive (loss) income $ ( 51,727 ) $ ( 29,076 ) $ 10,373

The accompanying notes form an integral part of these Consolidated Financial Statements.

Foreign currency translation adjustments 1,597 970

Comprehensive loss $ ( 87,005 ) $ ( 51,727 )

The accompanying notes are an integral part of the consolidated financial statements.

Summit Therapeutics Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

(in thousands, except share and per share data)

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income(Loss) Total Accumulated Deficit Total Stockholders' Equity (Deficit)

Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Total Accumulated Deficit Total Stockholders' Equity

Shares Amount

Balance at January 31, 2018 14,712,724 $ 147 $ 140,574 $ ( 4,319 ) $ ( 139,991 ) $ ( 3,589 )

Public offering of common stock, net of offering costs of $ 1,116

1,666,666 17 19,860 — — 19,877

Balance at December 31, 2019 67,178,054 $ 672 $ 241,204 $ ( 4,764 ) $ ( 158,249 ) $ 78,863

Private placement of common stock, net of offering costs of $ 48

14,970,060 150 49,802 — — 49,952

Fractional shares issued from reverse stock split 3 — — — — —

Issuance on common stock from exercise of share options 426,947 4 595 — — 599

1 unchanged sentence

Foreign currency translation adjustment — — — 970 — 970

Net income — — — — 10,869 10,869

Balance at January 31, 2019 32,077,974 $ 321 $ 191,205 $ ( 4,815 ) $ ( 129,122 ) $ 57,589

Private placement of common stock, net of offering costs of $ 912

35,075,690 351 49,152 — 49,503

Issuance on common stock from exercise of share options 24,390 — 2 — — 2

Stock-based compensation — — 845 — — 845

Foreign currency translation adjustments — — — 51 — 51

Net loss — — — — ( 52,697 ) ( 52,697 )

Balance at December 31, 2020 82,575,064 $ 826 $ 293,367 $ ( 3,794 ) $ ( 210,946 ) $ 79,453

Private placement of common stock, net of offering costs of $ 48

Rights offering of common stock, net of offering costs of $ 159

14,312,976 143 74,698 — — 74,841

Fractional shares issued from reverse stock split 3 — — — — —

Issuance on common stock from exercise of share options 426,947 4 595 — — 599

Issuance of common stock from exercise of stock options 1,151,500 11 3,077 — — 3,088

Stock-based compensation — — 12,804 — — 12,804

Imputed interest expense on promissory note payable to a related party — — 103 — — 103

Foreign currency translation adjustment — — — 1,597 — 1,597

1 unchanged sentence

Balance at December 31, 2021 98,039,540 $ 980 $ 384,049 $ ( 2,197 ) $ ( 299,548 ) $ 83,284

The accompanying notes form an integral part of these Consolidated Financial Statements.

The accompanying notes are an integral part of the consolidated financial statements.

Summit Therapeutics Inc.

Consolidated Statements of Cash Flows

(in thousands, except share and per share data)

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income ( 52,697 ) ( 29,127 ) 10,869

Adjustments to reconcile net (loss) income to net cash used in operating activities:

(in thousands)

Year Ended December 31, 2021 Year Ended December 31, 2020

Cash flows used in operating activities:

Net loss $ ( 88,602 ) $ ( 52,697 )

Adjustments to reconcile net loss to net cash used in operating activities:

Gain on remeasurement of liabilities — ( 480 )

(Gain) loss on recognition of contingent consideration payable ( 102 ) 2 1,001

Gain on recognition of contingent consideration payable — ( 102 )

Non-cash interest expense 196 255

Unrealized foreign exchange (gain) loss ( 278 ) 423 —

Depreciation of operating lease right-of-use assets 451 347 443

Unrealized foreign exchange loss (gain) 326 ( 278 )

Amortization of operating right-of-use assets 1,108 451

Depreciation 330 302

Amortization of intangible assets 1,017 1,250

Loss on disposal of assets 2 13 55

Impairment of goodwill and intangible assets 859 — 5,290

Impairment of intangible assets — 859

Stock-based compensation 12,804 1,766

Deferred income taxes — — ( 1,906 )

Other adjustments 301 ( 56 )

Changes in operating assets and liabilities:

Accounts and other receivables 212 5,439 ( 2,467 )

Accounts receivable ( 1,138 ) 212

Prepaid expenses 2,345 ( 447 )

Other current assets ( 24 ) 492 580

Other current and long-term assets 104 ( 24 )

Research and development tax credit receivable ( 6,015 ) ( 4,381 )

Deferred revenue and income 5,372 ( 2,358 ) ( 48,973 )

Deferred revenue and other income ( 813 ) 5,372

Accounts payable ( 1,711 ) 1,642

Accrued liabilities ( 1,296 ) ( 51 ) 144

Contingent consideration paid — ( 703 ) —

Lease liabilities ( 459 ) ( 456 ) ( 430 )

Other liabilities — — ( 235 )

Accrued liabilities and accrued compensation 8,229 ( 1,296 )

Operating lease liabilities ( 1,068 ) ( 459 )

Net cash used in operating activities ( 72,587 ) ( 48,111 )

CASH FLOWS FROM INVESTING ACTIVITIES

Contingent consideration paid — — ( 167 )

Cash flows used in investing activities:

Purchase of property and equipment ( 306 ) ( 421 )

Purchase of intangible assets — ( 136 ) ( 7 )

Net cash used in investing activities ( 306 ) ( 421 )

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows provided by financing activities:

Proceeds from the issuance of common stock 75,000 50,000

Transaction costs from the issuance of common stock ( 118 ) ( 48 )

Proceeds from related party promissory notes 110,000 —

Re-payment of related party promissory notes ( 110,000 ) —

Payments of related party promissory notes issuance costs ( 54 ) —

Proceeds from exercise of share options 3,088 599

Net cash provided by financing activities 77,916 50,551

Effect of exchange rates on cash and cash equivalents 556 190 ( 2,323 )

Increase in cash and cash equivalents 2,575 28,597 6,750

Cash and cash equivalents at beginning of the period / year 63,842 35,245 28,495

Cash and cash equivalents at end of the period / year 66,417 63,842 35,245

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

Effect of exchange rates on cash 351 556

Increase in cash 5,374 2,575

Cash at beginning of period 66,417 63,842

Cash at end of period $ 71,791 $ 66,417

Supplemental Disclosure of Cash Flow Information

Cash (received) paid for income taxes $ ( 70 ) $ 63 $ 72

The accompanying notes form an integral part of these Consolidated Financial Statements.

Notes to Consolidated Financial Statements

Nature of the Business

Cash paid for interest on related party promissory note $ 85 $ —

Cash paid (received) for income taxes $ 7 $ ( 70 )

Transaction costs included in accrued expenses $ 41 $ —

Leased assets obtained in exchange for operating lease liabilities $ 3,389 $ —

The accompanying notes are an integral part of the consolidated financial statements.

Summit Therapeutics Inc.

("Summit" or the "Company") is a biopharmaceutical company focused on the discovery, development and commercialization of novel antibiotics for serious infectious diseases.

Summit is conducting a Phase 3 clinical program focused on the infectious disease C.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Notes to Consolidated Financial Statements

Nature of Business and Operations and Recent Events

Nature of Business and Operations

The Company is a biopharmaceutical company focused on the discovery, development, and commercialization of patient-, physician-, caregiver- and societal-friendly medicinal therapies intended to improve quality of life, increase life expectancy, and resolve serious unmet needs.

The Company's novel mechanism pipeline of product candidates is designed with the goal to become the patient-friendly, new-era standard-of-care medicines, and to work in harmony with the human microbiome.

Currently, the Company's lead product candidate, ridinilazole, is a novel first-in-class drug that is engaged in a global Phase III clinical trial program.

On December 20, 2021, the Company announced topline results for the Phase III Ri-CoDIFy study evaluating ridinilazole for treating patients suffering from Clostridioides difficile infection, also known as C.

difficile infection, or CDI.

It is also seeking to expand the product candidate portfolio through the development of new mechanism, precision antibiotics using the proprietary Discuva Platform.

On September 18, 2020, Summit, a Delaware corporation, became the successor issuer to Summit Therapeutics plc, a public limited company incorporated under the laws of England and Wales with the Registrar of Companies of England and Wales, United Kingdom, for certain purposes under both the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, or the Exchange Act.

The Company's second product candidate, SMT-738, was announced in May 2021 for combating multidrug resistant infections, specifically Carbapenem-resistant Enterobacteriaceae (“CRE”) infections.

SMT-738 is the first of a novel class of precision antibiotics that has entered into preclinical development.

The Company intends to expand its portfolio by developing further new mechanism, new era product offerings that are designed to work in harmony with the human gut microbiome in the therapeutic areas of oncology and infectious diseases.

On September 18, 2020, Summit Therapeutics Inc.

("Summit"), a Delaware corporation, became the successor issuer to Summit Therapeutics plc, a public limited company incorporated under the laws of England and Wales with the Registrar of Companies of England and Wales, United Kingdom ("U.K."), for certain purposes under both the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Such succession occurred pursuant to a statutory scheme of arrangement under U.K.

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All assets and liabilities of Summit Therapeutics plc were assumed by Summit, resulting in the retention of the historical basis of accounting as if they had always been combined for accounting purposes and the historical consolidated financial statements of Summit Therapeutics plc became the historical consolidated financial statements of Summit Therapeutics Inc.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, which was subsequently declared as a pandemic by the World Health Organization.

The global impact of the outbreak rapidly evolved, triggering a period of global economic slowdown.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions.

Management believes the estimates and assumptions underlying the consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2020, however uncertainty over the ongoing impact COVID-19 will have on the global economy generally makes any estimates and assumptions as of December 31, 2020 inherently less certain than they would be absent of the current and potential impacts of COVID-19.

Actual results may ultimately differ from those estimates.

Going Concern

The accompanying consolidated financial statements are prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of the business.

As of December 31, 2020, the Company had cash and cash equivalents of $ 66.4 million and an accumulated deficit of $ 210.9 million.

During the year ended December 31, 2020, the Company incurred a net loss of $ 52.7 million and used $ 48.1 million of cash in operating activities.

All share and per share data for periods prior to the Redomiciliation Transaction in the financial statements were retroactively reflected to be presented as shares of the Company's common stock, par value $ 0.01 per share.

Recent Events

On May 12, 2021, the Company closed its rights offering, which was fully subscribed.

The Company received aggregate gross proceeds from the rights offering of $ 75,000 from the sale of 14,312,976 shares of its common stock at a price per share of $ 5.24 .

Issuance costs associated with the rights offering were immaterial.

In connection with the closing of the rights offering, a promissory note, dated April 20, 2021, was issued by the Company in favor of the Company's Chairman, Chief Executive Officer, and the beneficial owner of approximately 70 % of its outstanding common stock prior to this rights offering, Robert W.

Duggan, in the principal amount of $ 55,000 , matured and became due and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from the rights offering.

On August 11, 2021, based on a thorough review of the design and enrollment status of its two ongoing blinded Phase III Ri-CoDIFy trials, the Company announced that it combined its two blinded pivotal Phase III clinical trials evaluating ridinilazole versus vancomycin into a single study and presented this decision to the United States ("U.S.") Food and Drug Administration (the "FDA") as such.

During September 2021, the Company received feedback from the FDA that the FDA did not agree with the change to the primary endpoint that the Company proposed and subsequently implemented in its ongoing Phase III Ri-CoDIFy studies when combining the trials.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

On December 20, 2021, the Company announced topline results for the Phase III Ri-CoDIFy study evaluating ridinilazole, for the treatment of and Sustained Clinical Response (“SCR”), as defined below, for patients suffering from C.

difficile infection (" C.

infection" or "CDI").

The study showed that ridinilazole resulted in a numerically higher SCR rate than vancomycin, but did not meet the study’s primary endpoint for superiority.

The pivotal Phase III clinical trial consisted of two Phase III clinical trials combined into a single study, designed to assess, as the primary endpoint, the superiority of ridinilazole compared to vancomycin in SCR, which is defined as clinical response of the treated episode of CDI and no recurrence of CDI through 30 days after the end of treatment.

Additional endpoints included safety, tolerability, analyses of the gut microbiome and metabolome, in addition to quality of life and health economic outcome measures.

We are in the process of evaluating the future path forward with respect to ridinilazole, including potential partnership opportunities.

On March 10, 2022, the Company’s Chief Executive Officer, Robert W.

Duggan, entered into a Note Purchase Agreement (the “2022 Note”), pursuant to which he has loaned the Company $ 25,000 in exchange for the issuance by the Company of an unsecured promissory note in the amount of $ 25,000 .

The 2022 Note is to accrue interest at a rate per annum equal to the prime rate as reported in the Wall Street Journal , which is 3.25 % as of the effective date.

The 2022 Note becomes due upon the earlier of (i) the consummation of a registered public offering with net proceeds of no less than $ 25,000 or (ii) 18 months from the date of issuance of the 2022 Note.

Basis of Presentation and Use of Estimates

The consolidated financial statements include the accounts of Summit Therapeutics Inc.

and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.

GAAP") and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued research and development expenses, stock-based compensation, intangible assets, goodwill, other long-lived assets and income taxes.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

The progression of the COVID-19 pandemic continues to evolve and its enduring impact on the Company's business remains uncertain.

Management believes the estimates and assumptions underlying its financial statements are reasonable and supportable based on the information available as of December 31, 2021, however, the extent to which the COVID-19 pandemic impacts the Company's financial results beyond December 31, 2021 will depend on future developments that are highly uncertain and cannot be predicted at this time.

Liquidity and Capital Resources

During the year ended December 31, 2021, the Company incurred a net loss of $ 88,602 and cash flows used in operating activities was $ 72,587 .

As of December 31, 2021, the Company had an accumulated deficit of $ 299,548 , cash of $ 71,791 , research and development tax credit receivable of $ 15,695 and accounts receivable of $ 1,464 .

The Company expects to continue to generate operating losses for the foreseeable future.

Until such time as the Company can generate substantial revenue and achieve profitability, the Company will need to raise additional capital.

On March 25, 2021, the Company’s Board of Directors approved a rights offering available to all holders of record of the Company’s common stock, as of the close of business on April 9, 2021.

The terms of this rights offering are more fully described in Note 23 – Subsequent Events.

Assuming the rights offering is fully subscribed, the Company will receive gross proceeds of up to $ 75.0 million, less expenses related to the rights offering.

Duggan, the Executive Chairman and Chief Executive Officer and primary stockholder, has given his commitment to the Board that he will subscribe for at least the full amount of his basic subscription rights.

Upon the successful completion of the rights issue, the Company will repay the unsecured promissory note of $ 55.0 million received from Mr.

Duggan on March 24, 2021 (see note 23 - Subsequent Events).

This promissory note will mature and become due upon the earlier of (i) the consummation of a registered public offering with net proceeds of no less than $ 55.0 million, or (ii) 13 months from the date of issuance of the promissory note.

The Company's existing cash resources, funding agreements, receipt from the promissory note and research and development tax credits receivable, are expected to be sufficient to enable the Company to fund its current operating plans until the second quarter of 2022.

If the Rights Offering is fully subscribed at $ 75.0 million, the Company expects to be able to fund its current operating plan until the fourth quarter of 2022.

The Company continues to evaluate options to further finance its cash needs through a combination of some, or all, of the following:

equity and debt offerings, collaborations, strategic alliances, grants and clinical trial support from government entities, philanthropic, non-government and not-for-profit organizations and patient advocacy groups, and marketing, distribution or licensing arrangements.

While the Company believes that funds would be available in this manner before the second quarter of 2022, there can be no assurance that the Company will be able to generate funds, on terms acceptable to the Company, on a timely basis or at all, which would impact the Company’s ability to continue as a going concern.

Until the Company can generate substantial revenue and achieve profitability, the Company will need to raise additional capital to fund its ongoing operations and capital needs.

Based on the Company's current funding arrangements and financial resources as of December 31, 2021, and after considering proceeds received of $ 25,000 from the 2022 Note issued on March 10, 2022, the Company has the ability to fund its operating costs and working capital needs for more than twelve months from the date of issuance.

In order to continue to fund the operations of the Company beyond this time period, management has developed plans, which primarily consist of raising additional capital through some combination of equity or debt financings, and/or potentially entering into new collaborations.

There is no assurance, however, that additional financing will be available when needed or that management of the Company will be able to obtain financing on terms acceptable to the Company.

If the Company is unable to obtain funding when required

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

in the future, the Company could be required to delay, reduce, or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result from the outcome of this uncertainty.

Summary of Significant Accounting Policies

1 unchanged sentence

These policies have been consistently applied to all the years presented, unless otherwise stated.

Certain prior period amounts within the consolidated statements of operations and comprehensive (loss) income have been reclassified to conform to the current period presentation.

Specifically, foreign currency losses of $ 1.3 million during the eleven months ending December 31, 2019 and foreign currency gains of $ 0.6 million during the year ending January 31, 2019, were included within general and administrative expenses and have now been reclassified to be presented as part of other income (expense), net in conformity with the current period presentation.

Revision and Immaterial Correction of an Error in Previously Issued Financial Statements

During the quarter ended December 31, 2020, the Company identified a deferred tax asset relating to the acquired carried forward tax losses arising from the acquisition of Discuva Limited in December 2017 that was not included as part of the business combination accounting.

Furthermore, the Company identified deferred tax assets relating to available carried forward group tax losses arising as a result of the acquisition of Discuva Limited in December 2017 that were not included in the Company's subsequent balances sheets.

As a result, in the Company's previously issued December 31, 2019, January 31, 2019 and January 31, 2018 financial statements, the Company incorrectly recognized $ 0.4 million of goodwill and omitted the inclusion of deferred tax assets of $ 2.0 million, $ 2.2 million and $ 1.3 million in the balance sheets as of December 31, 2019, January 31, 2019 and January 31, 2018 respectively.

Since the Company's deferred tax liabilities and deferred tax assets both arise in the U.K.

tax jurisdiction, accordingly these are offset on the consolidated balance sheet.

The Company has recorded a full valuation allowance against the deferred tax assets in excess of the deferred tax liabilities, as the deferred tax liability represents future reversals of existing taxable temporary differences.

The impact of these errors on net (loss) income was a deferred tax charge of $ 0.1 million for the eleven months ended December 31, 2019, and a deferred tax benefit of $ 1.0 million and $ 0.8 million for the years ended January 31, 2019 and January 31, 2018, respectively.

The misstatement had no net impact on the Company’s consolidated statements of cash flows.

Management concluded that the correction was not material to previously issued consolidated financial statements.

Since these errors were not material to any previously issued annual or interim financial statements, no amendments to previously filed financial statements were required.

Consequently, the Company has corrected for these errors by revising the December 31, 2019, January 31, 2019 and January 31, 2018 balances herein.

Principles of Consolidation

2 unchanged sentences

Securities and Exchange Commission.

The consolidated financial statements include the accounts of Summit Therapeutics Inc and its wholly owned subsidiaries.

The consolidated financial statements include the accounts of Summit Therapeutics Inc.

and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

In December 2019, the Board of Directors adopted a resolution to change the Company’s fiscal year end from January 31 to December 31, commencing December 31, 2019.

Use of Estimates

3 unchanged sentences

Foreign Currency Translation

The financial results of the Company's activities are reported in U.S.

dollars (“USD”).

The statement of comprehensive income of the Company's foreign subsidiaries which have a functional currency other than USD are translated into USD using average exchange rates for the period.

The net assets of foreign subsidiaries whose functional currencies are other than USD are

translated into USD using exchange rates as of the balance sheet date.

The effects that arise from translating these subsidiaries at changing rates are recorded as a component of accumulated other comprehensive income (loss) within stockholders' equity (deficit).

The financial statements of the Company’s subsidiaries with functional currencies other than the U.S.

dollar are translated into U.S.

dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders’ equity and weighted average exchange rates for operating results.

Translation gains and losses are included in accumulated other comprehensive (loss) income in shareholders’ equity.

Foreign currency transaction gains and losses are included in other (expense) income, net in the results of operations.

The Company recorded realized and unrealized foreign currency transaction (losses) gains of $( 2,135 ) and $ 54 for the years ended December 31, 2021 and 2020, respectively, which is included in other (expense) income in the statements of operations and comprehensive loss.

Revenue Recognition

Effective February 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”), using the full retrospective method.

The Company accounts for revenue using Accounting Standards Codification ("ASC") 606 ("ASC 606").

This standard applies to all contracts with customers, except for contracts that are within the scope of other standards.

11 unchanged sentences

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

24 unchanged sentences

Any such adjustments are recorded on a cumulative catch-up basis, which would affect the amounts of revenue and earnings in the period of adjustment.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

For arrangements that include sales-based royalties, including milestone payments due upon first commercial sales or based on a level of sales, that are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) the occurrence of the related sales or (ii) the date upon which the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied.

To date, the Company has not recognized any royalty revenue from any of its licensing arrangements.

Manufacturing Supply Services

Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered options.

The Company assesses if these options provide a material right to the licensee and, if so, they are accounted for as separate performance obligations.

If the Company is entitled to additional payments when the customer exercises these options, any additional payments are recorded when the customer obtains control of the goods, which is upon delivery.

To date, the Company has not yet entered into any manufacturing supply arrangements

Other Operating Income

5 unchanged sentences

Grant income is not recognized as deductions of research and development costs because the Company acts as the principal in conducting the research and development activities and these contracts are central to its ongoing operations.

The funds received through these means are held as deferred income in the consolidated balance sheets and are released to the consolidated statement of operations and comprehensive (loss) income as the underlying expenditure is incurred and to the extent the conditions of the grant are met.

The related costs incurred by the Company are included in research and development expense in the Company’s consolidated statements of operations and comprehensive (loss) income.

The funds received through these means are held as deferred income in the consolidated balance sheets and are released to the consolidated statement of operations and comprehensive loss as the underlying expenditure is incurred and to the extent the conditions of the grant are met.

The related costs incurred by the Company are included in research and development expense in the Company’s consolidated statements of operations and comprehensive loss.

The Company benefits from two U.K.

R&D tax credit cash rebate regimes:

Small and Medium Enterprise, or SME, Program and the Research and Development Expenditure Credit, or RDEC, Program.

Qualifying expenditures largely comprise employment costs for research staff, consumables, a proportion of relevant, permitted sub-contract costs and certain internal overhead costs incurred as part of research projects for which the Company does not receive commercial or other funding income.

Credits related to the SME Program and RDEC are recorded as other operating income in the consolidated statements of operations and other comprehensive (loss)/income.

Under both schemes, the Company receives cash rebate payments ranging from 9.7 % to 33.4 % of eligible research and development expenditure, these payments are not dependent on the Company’s pre-tax net income levels.

research and development ("R&D") tax credit cash rebate regimes:

Small and Medium Enterprise ("SME") Program and the Research and Development Expenditure Credit ("RDEC") Program.

Each reporting period, management evaluates which tax relief programs the Company is expected to be eligible for and records as other operating income the portion of the expense that it expects to qualify under the programs, that it plans to submit a claim for, and it has reasonable assurance that the amount will ultimately be realized.

Based on criteria established by HM Revenue and Customs (“HMRC”), management of the Company expects a proportion of expenditures being undertaken in relation to its pipeline research, clinical trials management and manufacturing development activities to be eligible for the research and development tax relief programs for the year ended December 31, 2021.

Qualifying expenditures largely comprise of employment costs for research staff, consumables, a proportion of relevant, permitted sub-contract costs and certain internal overhead costs incurred as part of research projects for which the Company does not receive commercial or other funding income.

Credits related to the SME and RDEC Programs are recorded as other operating income in the consolidated statements of operations and other comprehensive (loss)/income.

Under both schemes, the Company receives cash rebate payments of up to 33.3 % of eligible research and development expenditures and these payments are not dependent on the Company’s pre-tax net income levels.

The Company has qualified under the more favorable SME regime for the year ended December 31, 2020 and expects to qualify under the SME regime for the year ending December 31, 2021.

Net Income Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period.

Diluted net loss per share is computed by dividing the diluted net loss by the weighted-average number of common shares outstanding for the period, including potentially dilutive common shares.

The dilutive effect of share options and warrants are determined under the treasury stock method using the average market price for the period.

In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options and warrants that are in-the-money.

Business Combinations

1 unchanged sentence

Acquired assets and assumed liabilities are measured at their fair values at the acquisition date.

The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill.

The excess of the consideration transferred over the net fair value of assets acquired and liabilities assumed is recorded as goodwill.

The accounting for an acquisition involves a considerable amount of judgement and estimation.

Cost, income, market or a combination of approaches may be used to establish the fair value of consideration exchanged, assets acquired, and liabilities assumed, depending on the nature of those items.

The valuation approach is

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

determined in accordance with generally accepted valuation methods.

Key areas of estimation and judgment may include the selection of valuation approaches, cost of capital, market characteristics, cost structure, impacts of synergies, and estimates of terminal value, among other factors.

While the Company uses estimates and assumptions as part of the purchase price allocation process to estimate the value of assets acquired and liabilities assumed, estimates are inherently uncertain and subject to refinement.

During the measurement period, which maybe up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill, to the extent that adjustments are identified to the preliminary purchase price allocation.

Upon conclusion of the measurement period, or final determination of the value of the assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to results of operations.

Results of operations related to business combinations are included prospectively beginning with the date of acquisition and transaction costs related to business combinations are recorded within general and administrative expenses.

Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired.

Goodwill is assigned to reporting units and evaluated for impairment on at least an annual basis, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed.

If the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill).

Goodwill represents the excess of the consideration transferred over the fair value of net assets acquired.

Goodwill is assigned to reporting units at the time of acquisition or when there is a change in the reporting structure and bases that allocation on which reporting units will benefit from the acquired assets and liabilities.

Reporting units are defined as operating segments or one level below an operating segment, referred to as a component.

The Company assesses goodwill for impairment on an annual basis or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

In performing the Company’s annual goodwill impairment test, the Company is permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount, including goodwill.

In performing the qualitative assessment, the Company considers certain events and circumstances specific to the reporting unit and to the entity as a whole, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test.

If the Company chooses to undertake the qualitative assessment and concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company would then proceed to the quantitative impairment test.

In the quantitative assessment, the Company compares the fair value of the reporting unit to its carrying amount, which includes goodwill.

If the fair value exceeds the carrying value, no impairment loss exists.

If the fair value is less than the carrying amount, a goodwill impairment loss is measured and recorded.

As of December 31, 2021, the Company performed its annual impairment assessment of goodwill by performing a qualitative analysis for its single identified reporting unit for goodwill and determined that it is more likely than not that the fair value of the reporting unit exceeded its carrying amount.

Intangible Assets

Intangibles assets include patents, licenses, an option over non-financial assets and a research and development discovery platform ("Discuva Platform").

Patents, licenses, and the option over non-financial assets are initially recorded at fair value, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives (see below).

The Company periodically evaluates whether current facts or circumstances indicate that the carrying values of its acquired intangibles may not be recoverable.

If such circumstances are determined to exist, an estimate of the undiscounted future cash flows of these assets, or appropriate asset groupings, is compared to the carrying value to determine whether an impairment exists.

If the asset is determined to be impaired, the loss is measured based on the difference between the carrying value of the intangible asset and its fair value, which is determined based on the net present value of estimated future cash flows.

The intangible asset relating to the Discuva Platform capitalized as part of the acquisition of Discuva Limited in December 2017 is a software based platform and is available for alternative use.

As such, it is subject to amortization over the period of the relevant associated patents.

Other intangible assets are amortized in equal installments over their useful estimated lives as follows:

Software licenses 3 - 5 years

Intangible assets include patents, licenses, an option over non-financial assets and a research and development discovery platform ("Discuva Platform").

The Company evaluates the recoverability of its intangible and long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable.

If events and circumstances indicate that the carrying amount may not fully be recoverable, the Company will perform a qualitative assessment, and consider certain events and circumstances specific to the intangible asset and to the entity as a whole, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount.

This periodic review may result in an adjustment of estimated depreciable lives or asset impairment.

When indicators of impairment are present, the carrying values of the asset are evaluated in relation to their operating performance and future undiscounted cash flows of the underlying business.

If the future undiscounted cash flows are less than their carrying value, impairment exists.

The impairment is measured as the difference between the carrying value and the fair

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

value of the underlying asset.

Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

Other intangible assets are amortized in equal installments over their estimated useful lives as follows:

Intangible Asset Amortization Period

Option over non-financial assets Over the period of the relevant agreement

Amortization of intangible assets is included as part of the research and development expense line shown on the face of the consolidated statement of operations and comprehensive (loss) income.

Amortization of intangible assets is included as part of the research and development expense line shown on the face of the consolidated statement of operations and comprehensive loss.

Property and Equipment

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Office and IT equipment 3 - 5 years

Depreciation is recognized as part of the general and administrative and research and development expense lines shown on the face of the consolidated statement of operations and comprehensive (loss) income depending on the nature of the underlying assets.

Depreciation is recognized as part of the general and administrative and research and development expense lines shown on the face of the consolidated statement of operations and comprehensive loss depending on the nature of the underlying assets.

Expenditures for repairs and maintenance are expensed as incurred.

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations.

The Company determines if an arrangement is a lease at inception.

At the lease commencement date, the Company measures and recognizes a lease liability and a right of use ("ROU") asset in the financial statements.

ROU assets represent the Company's right to use an underlying asset for the lease term, and the lease liabilities represent the Company's obligation to make lease payments arising from the lease.

The Company has operating leases for real estate.

The Company does not have any finance leases.

Under Accounting Standards Codification 842, a contract is or contains a lease when the lessee has the right to control the use of an identified asset.

The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations.

The lease term used to calculate the lease liability include options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

At the lease commencement date, the Company measures and recognizes a lease liability and a right-of-use asset in the financial statements.

Lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date.

As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

ROU asset is measured at the initial measurement of the lease liability, plus any lease payments made prior to the commencement date and any initial direct costs incurred, less any lease incentives received.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred.

The Company has lease agreements with lease and non-lease components.

For all leases with non-lease components the Company accounts for the lease and non-lease components as a single lease component.

The right-of use asset is measured by taking the present value of future lease payments, plus any incremental direct costs incurred, less any lease incentives received.

As most of the Company's leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the lease term and the economic environment of the lease at the lease commencement date, which is then utilized to determine the present value of future lease payments.

Lease expense for minimum lease payments are recognized on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred.

The Company has existing lease agreements with lease and non-lease components, has elected to account for the lease and non-lease components as a single lease component, and has allocated all of the contract consideration to the lease component only.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet.

The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.

Financial liabilities on funding arrangements

When entering into funding agreements with charitable and not for profit organizations, management is required to assess whether, based on the terms of the agreement, it can avoid a transfer of cash by settlement using a non-financial obligation.

GAAP, when such arrangements also give the counterparties rights over unexploited intellectual property, all or part of the funding agreement should be accounted for as a financial liability recognized in the balance sheet rather than as a charitable grant.

Financial liabilities are initially recognized at fair value using a discounted cash flow model with the difference between the fair value of the liability and the cash received considered to represent a charitable grant.

The financial liabilities are subsequently measured at amortized cost using discounted cash flow models which calculate the risk adjusted net present values of estimated potential future cash flows for the relevant project.

The financial liabilities are remeasured when there is a specific significant event that provides evidence of a significant change in the probability of successful development such as the completion of a phase of research or public reporting of significant interim data and changes in use or market for a product.

The model is updated for changes in the clinical probability of success and other associated assumptions with the discount factor remaining unchanged within the model.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials.

Research and development expenses consist of costs incurred to discover, research and develop product candidates, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials.

Non - refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses.

16 unchanged sentences

These assumptions include:

• Expected term—The expected term represents the average period that the stock-based awards are expected to be outstanding and is based on a method that considers historical information of stock option exercise patterns and post-vesting termination behavior.

• Expected term—The expected term of stock options represents the weighted-average period the stock options are expected to be outstanding.

The Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission.

The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

• Expected volatility—The expected volatility was calculated based on historical volatility of the Company's share price.

• Risk-free interest rate—The risk-free interest rate is based on the United States Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

• Expected dividend—The Company has no plans to pay dividends on its common stock.

Therefore, the Company used an expected dividend yield of zero .

The Company accounts for estimated expected forfeitures as compensation cost for stock-based awards is recognized.

Stock option and restricted stock unit awards have been granted at fair value to nonemployees, in connection with research and consulting services provided to the Company, and to employees, in connection with Stock Purchase and Restriction Agreements.

Equity awards generally vest over terms of three or four years .

• Risk-free interest rate—The risk-free rate assumption is based on the U.S.

Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

• Expected dividend—The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

The Company has not paid and does not intend to pay dividends.

The Company estimates expected forfeitures at the time of grant instead of accounting for forfeitures as they occur.

Stock option and restricted stock unit awards have been granted at fair value to non-employees, in connection with research and consulting services provided to the Company, to non-employees in connection with corporate activities, and to employees, in connection with Stock Purchase and Restriction Agreements.

Equity awards generally vest over terms of 3 or 4 years.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The provision for income taxes is determined using the asset and liability approach.

6 unchanged sentences

The Company has recorded a full valuation allowance against the deferred tax assets in excess of its deferred tax liabilities, as the deferred tax liability represents future reversals of existing taxable temporary differences.

These deferred tax balances both arise in the U.K.

tax jurisdiction, accordingly these are offset in the consolidated balance sheet.

The Company records interest and penalties related to income tax matters as part of income tax expense.

1 unchanged sentence

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of short-term cash deposits and accounts and other receivables.

The Company's cash and cash equivalents are comprised of short-term cash deposits at a variety of financial institutions with strong credit ratings in amounts that may exceed federally insured limits and has not experienced any losses on such accounts.

Cash balances maintained during the year have been principally held with reputable U.K.-based and U.S.-based banks and building societies.

The Company's cash is comprised of short-term cash deposits at a variety of financial institutions with strong credit ratings in amounts that may exceed federally insured limits and has not experienced any losses on such accounts.

Cash balances maintained during the year have been principally held with reputable U.K.-based and U.S.-based banks.

The Company does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

As of December 31, 2020 and December 31, 2019 the majority of cash and cash equivalents were placed with HSBC Bank plc.

The Company maintains deposits in accredited financial institutions in excess of federally insured limits.

The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The credit risk with respect to customers and funding bodies is limited as the Company has only a small number of these arrangements, including with Eurofarma, BARDA and CARB-X.

1 unchanged sentence

These programs could be adversely affected by a significant interruption in these services or the availability of materials.

Financial instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets:

quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Fair Value Measurements

In accordance with the provisions of fair value accounting, a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based on the exit price model.

The fair value measurement guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The guidance describes three levels of inputs that may be used to measure fair value:

Quoted prices in active markets for identical assets or liabilities as of the reporting date.

Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 2 assets and liabilities include debt securities with quoted prices that are traded less

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

frequently than exchange-traded instruments or securities or derivative contracts that are valued using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, the Company categorizes such assets and liabilities based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset.

Assumed Contingent Liabilities

7 unchanged sentences

This discount factor has been calculated using appropriate measures and rates which could have been obtained in the period that the contingent liabilities were assumed.

Accretion of the discount factor, or interest expense, is recognized as part of other income (expense), net in the Consolidated Statement of Operations and Comprehensive (Loss) Income.

Accretion of the discount factor is recognized as part of operating expenses in the consolidated statements of operations and comprehensive loss.

Warrants issued by the Company are recognized and classified as equity when, upon exercise, the Company would issue a fixed amount of its own equity instruments (common stock) in exchange for a fixed amount of cash or another financial asset.

3 unchanged sentences

Only if the fair value of the services cannot be measured reliably would the fair value of the equity instruments granted be used.

The fair value for the warrants is calculated using the Black-Scholes formula and charged to the Consolidated Statement of Operations and Comprehensive (Loss) Income on a straight-line

basis over the period of the consulting services.

The fair value for the warrants is calculated using the Black-Scholes formula and recorded in the consolidated statement of operations and comprehensive loss on a straight-line basis over the period of the consulting services.

If the services are terminated prior to the end of the consultancy agreement, the warrants cease vesting and any unvested portion of the warrants will lapse immediately.

The warrants in issue are classified within stockholders’ equity as they are indexed to the Company's own shares of common stock and require settlement in its shares of common stocks with no provision for any cash settlement.

New Accounting Standards

Recently adopted accounting standards

In June 2016, the FASB issued ASU 2016-13:

Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This update introduces the current expected credit loss ("CECL") model.

Under this model, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument.

This update became effective for the Company on January 1, 2020.

The adoption of this update did not have a material impact on the Company’s consolidated financial statements, since the Company has immaterial amounts of accounts and other receivables, all of which are considered fully recoverable.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

This update became effective for the Company on January 1, 2020.

The adoption of this update did not have a material impact on the Company’s consolidated financial statements, as the value of financial instruments with Level 3 inputs was $nil as of December 31, 2020.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40).

Under the guidance, public companies will be required to capitalize implementation costs incurred in a cloud computing arrangement that is a service contract.

This update became effective for the Company on January 1, 2020.

The adoption of this update did not have a material impact on the Company’s consolidated financial statements, since the Company acquired immaterial amounts of software licenses during the year ended December 31, 2020.

Recent accounting standards not yet adopted

Recently Issued or Adopted Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2021-10, " Government Assistance (Topic 832)." This ASU increases the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on an

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

entity's financial statements as diversity currently exists in the recognition, measurement, presentation and disclosure of government assistance received by business entities because of the lack of specific authoritative guidance in U.S.

This ASU is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2021.

Early application of this ASU is permitted.

The Company applied the amendments of this ASU to its disclosures during the fourth quarter of 2021 and the application of this ASU did not have a material impact on its financial position, results of operations or cash flows.

In October 2021, the FASB issued ASU No.

2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." This ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency relating to:

1) recognition of an acquired contract liability and 2) payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in this ASU require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination, whereas current U.S.

GAAP requires that the acquirer measure such assets and liabilities at fair value on the acquisition date.

This ASU is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2022.

The Company will apply this ASU on a prospective basis for business combinations once this ASU is effective and at that time, will be able to determine the potential impact on its financial position, results of operations or cash flows.

In May 2021, the FASB issued AS No.

2021-04, "Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity's Own Equity (Subtopic 815-40) - Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options." This ASU provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange.

This ASU is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2021.

The Company will apply this ASU on a prospective basis for any modifications or exchanges once this ASU is effective and at that time, will be able to determine the potential impact on its financial position, results of operations or cash flows.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes.

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The amendments in this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments are also intended to improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issues ASU 2017-04, Intangibles - Goodwill and Other (Topic 350).

This update simplifies the accounting for goodwill impairments by removing the requirement to determine the fair value of individual assets and liabilities in order to calculate a reporting unit’s “implied” goodwill under the current guidance.

This update will be effective for the Company for fiscal years beginning after December 15, 2022.

The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the FASB ASC), the American Institute of Certified Public Accountants, and the SEC did not, or are not expected to have a material impact on the Company's consolidated financial statements .

2019-12, "Income Taxes (Topic 740)." This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application and simplify U.S.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

This ASU is effective for annual periods, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company adopted this ASU during the first quarter of 2021 and the adoption of this ASU did not have a material impact on its financial position, results of operations or cash flows.

Segment Reporting

.Operating segments are defined as components of a business for which separate discrete financial information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance.

The Company and its chief operating decision maker, the Company’s Chief Executive Officer, view the Company’s operations and manages its business as a single operating segment, which is the discovery, development and commercialization of novel antibiotics for serious infectious diseases.

The Company operates in 2 geographic regions:

the United Kingdom and the United States.

Substantially all of the Company's long-lived assets are held in the United Kingdom.

The Company's chief operating decision makers (the "CODM function"), which are the Company's Chief Executive Officer and Chief Operating Officer, utilize consolidated financial information to make decisions about allocating resources and assessing performance for the entire Company.

The CODM function approves of key operating and strategic decisions, including key decisions in clinical development and clinical operating activities, entering into significant contracts, such as revenue contracts and collaboration agreements and approves the Company's consolidated operating budget.

The CODM function views the Company's operations and manages its business as a single reportable operating segment.

The Company's single operating segment covers the Company’s research and development activities, primarily comprising the CDI program and antibiotic pipeline research activities.

As the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company operates in two geographic regions:

The following table summarizes the Company's long-lived assets, which include the Company's property and equipment, net and right-of-use assets by geography:

Year Ended December 31, 2021 Year Ended December 31, 2020

United Kingdom $ 2,762 $ 1,228

United States 722 51

$ 3,484 $ 1,279

For details of revenue from external customers by geography refer to Note 7.

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Analysis of revenue by category:

The following table summarizes revenue by category:

Year Ended December 31, 2021 Year Ended December 31, 2020

Revenue by category:

Licensing agreements $ 1,809 $ 860

Research collaboration agreement — — 327

$ 860 $ 743 $ 57,088

Revenue recognized during the year ended December 31, 2020 consists only of amounts received from the license and commercialization agreement with Eurofarma Laboratórios S.A.

Revenue recognized during prior periods also includes amounts received from a license and collaboration agreement with Sarepta Therapeutics, Inc.

(which was terminated in August 2019) and the a research collaboration agreement with F.Hoffmann-La Roche Ltd (which ended in February 2018).

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Analysis of revenue by geography:

Revenue recognized during the years ended December 31, 2021 and December 31, 2020 consists of amounts received from the Company's license and commercialization agreement with Eurofarma Laboratórios S.A.

The following table summarizes revenue by geography:

Year Ended December 31, 2021 Year Ended December 31, 2020

Revenue by geography:

United States $ — $ —

Latin America 1,809 860

Europe — — 327

$ 1,809 $ 860

The analysis of revenue by geography has been identified on the basis of the geographical location of each collaboration partner.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The following table summarizes the deferred revenue relating to Eurofarma Laboratórios S.A.

and deferred other income relating to BARDA (as defined in Note 8), respectively:

Beginning deferred revenue and other income, January 1 (1)

Additions 5,438

Amount of deferred revenue and other income recognized in the statement of operations ( 6,438 )

Ending deferred revenue and other income, December 31 (2)

(1) Beginning deferred revenue and other income included $ 8,370 of current deferred revenue and other income and $ 569 of long-term deferred revenue and other income.

(2) Ending deferred revenue and other income is classified within current liabilities.

Refer to Note 8 below for further details regarding other income recognized under the BARDA contract.

Eurofarma Laboratórios S.A.

2 unchanged sentences

The Company has retained commercialization rights in the rest of the world.

Under the terms of the license and commercialization agreement with Eurofarma, the Company received an upfront payment of $ 2.5 million from Eurofarma in December 2017.

In February 2020, the Company reached the first enrollment milestone and received $ 1.0 million.

The terms of the contract have been assessed under ASC 606 and currently only the upfront payment and the first enrollment milestone payment are included in the transaction price.

Under the terms of the license and commercialization agreement with Eurofarma, the Company received an upfront payment of $ 2,500 in December 2017.

In February 2020, the Company reached the first enrollment milestone and earned $ 1,000 .

In September 2021, the Company reached the second enrollment milestone and earned $ 1,250 .

The terms of the contract have been assessed under ASC 606 and currently only the upfront payment and the first two enrollment milestone payments are included in the transaction price.

These payments were initially reported as deferred revenue in the balance sheet and are being recognized as revenue ratably over the performance period.

In addition, the Company will be entitled to receive an additional $ 2.75 million in development milestones upon the achievement of staged patient enrollment targets in the licensed territory in one of the two planned Phase 3 clinical trials of ridinilazole.

The Company is eligible to receive up to $ 21.4 million in development, commercial and sales milestones when cumulative net sales equal or exceed $ 100.0 million in the Eurofarma licensed territory.

Each subsequent achievement of an additional $ 100.0 million in cumulative net sales will result in the Company receiving additional milestone payments, which, when combined with anticipated product supply transfer payments from Eurofarma paid to the Company in connection with a commercial supply agreement to be entered into between the two parties, will provide payments estimated to range from a mid-teens to high-teens percentage of cumulative net sales in the Eurofarma licensed territory.

The Company estimates such product supply transfer payments from Eurofarma will range from a high single-digit to low double-digit percentage of cumulative net sales in the licensed territory.

Revenue recognized during the period ended December 31, 2021 was based on the transaction price that included the upfront payment and the first two enrollment milestones earned in accordance with the Company's revenue recognition policy.

Revenue recognized during the period ended December 31, 2020 was based on the transaction price that included the upfront payment and the first enrollment milestone earned in accordance with the Company's revenue recognition policy.

The revenue is being recognized ratably over the performance period to reflect the transfer of control to the customer occurring over the time period that the research and development services are provided by the Company.

This output method is, in management’s judgment, the best measure of progress towards satisfying the performance obligation.

As of December 31, 2021 and 2020, the current contract liability relating to the Eurofarma contract was $ 756 and $ 759 , respectively, and was recorded in current deferred revenue in the consolidated balance sheet.

As of December 31, 2021 and 2020, the non-current contract liability relating to the Eurofarma contract was $ 0 and $ 569 , respectively, and was recorded in non-current deferred revenue and other income in the consolidated balance sheet.

In addition, the Company will be entitled to receive an additional $ 1,500 for various development milestones.

The Company is also eligible to receive up to $ 21,400 in additional development, commercial and sales milestones when cumulative net sales equal or exceed $ 100,000 in the Eurofarma licensed territory.

Each subsequent achievement of an additional $ 100,000 in cumulative net sales will result in the Company receiving additional milestone payments, which, when combined with anticipated product supply transfer payments from Eurofarma paid to the Company in connection with a commercial supply agreement to be entered into between the two parties, will provide payments estimated to range from a mid-teens to high-teens percentage of cumulative net sales in the territories where we have granted Eurofarma commercialization rights.

Upon achievement of these milestones, the Company will recognize the revenues in accordance with the Company's revenue policy.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Other Operating Income

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Analysis of other operating income by category:

Income recognized in respect of BARDA $ 9,472 $ 16,570 $ 17,375

Grant income 477 829 1,576

Income on remeasurement of financial liabilities on funding arrangements — — 715

Research and development credit 9,363 5,473 2,934

Other income — — 8

The following table sets forth the components of other operating income by category:

Year Ended December 31, 2021 Year Ended December 31, 2020

Other operating income by category:

Funding income from BARDA (as defined below) $ 4,604 $ 9,472

Research and development tax credits 15,206 9,363

Grant income from CARB-X (as defined below) 1,158 477

$ 20,968 $ 19,312

In September 2017, the Company was awarded a funding contract from the Biomedical Advanced Research and Development Authority ("BARDA"), an agency of the US government's Department of Health and Human Services' Office of the Assistant Secretary for Preparedness and Response, to fund a specified portion of the clinical and regulatory development activities of ridinilazole for the treatment of C.

difficile infection ("CDI").

Under the terms of this contract, the Company was initially eligible to receive base period funding of $ 32 million.

In addition, the contract included three option work segments that, if exercised in full by BARDA, would increase the total federal government funding under the contract to approximately $ 62 million.

In August 2018, BARDA exercised one of the option work segments worth $ 12 million.

In June 2019, BARDA increased the total value of the funding contract to up to $ 63.7 million;

at this time, BARDA also exercised a second of the option work segments worth $ 9.6 million to bring the total amount of committed BARDA funding to $ 53.6 million.

In January 2020, BARDA increased its award by $ 8.8 million to bring the total amount of the funding contract to $ 72.5 million and the total amount of committed BARDA funding to $ 62.4 million.

BARDA (as defined below)

In September 2017, the Company was awarded a funding contract from the Biomedical Advanced Research and Development Authority ("BARDA"), part of the Office of the Assistant Secretary for Preparedness and Response at the United States Department of Health and Human Services, in support of the Company's Ri-CoDIFy clinical trials and clinical development of of ridinilazole.

The awarded contract was originally worth up to $ 62,000 .

In June 2019 and again in January 2020, BARDA increased the value of the contract such that it is now worth up to $ 72,500 and brought the total amount of committed funding to $ 62,400 .

The remaining federal government funding is dependent on BARDA in its sole discretion exercising the final independent option work segment, upon the achievement by the Company of certain agreed-upon milestones for ridinilazole.

As of December 31, 2020, an aggregate of $ 53.3 million of the total committed BARDA funding had been received and the Company has recognized $ 46.2 million of cumulative income since contract inception.

Grant income includes income from funding arrangements with CARB-X for the Company's antibiotic pipeline research and development activities.

In July 2018, the Company was granted a sub-award of up to $ 4.5 million from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program, or CARB-X, to help fund the selection of a preclinical candidate from the Company's lead gonorrhea series of clinical candidates and support the development of the selected candidate through the end of a Phase 1 clinical trial.

Under the award, the Company received an initial $ 2.0 million in funding from CARB-X in July 2018.

In February 2020, CARB-X increased the value of the initial funding by $ 1.2 million.

The Company recognized income of up to 70 % of eligible research and development expenditures which are funded by CARB-X, up to the maximum award.

In the third quarter of 2020, the Company decided not to advance the DDS-01 series of antibiotics and to cease work on the gonorrhea program based on toxicology data from preclinical studies.

It is expected CARB-X will cover its remaining share of the work that has been funded under the award.

As of December 31, 2021, an aggregate of $ 56,492 of the total committed BARDA funding had been received and the Company has recognized $ 50,265 of cumulative income since contract inception.

Research and development credits

Credits from research and development ("R&D") tax credit, consists of the R&D tax credit received in the U.K.

Income from tax credits, consist of R&D tax credits received in the U.K.

The Company benefits from two U.K.

R&D tax credit cash rebate regimes:

Small and Medium Enterprise, or SME, Program and the Research and Development Expenditure Credit ("RDEC") Program.

Tax credits related to the SME Program and RDEC are recorded as other operating income in the consolidated statements of operations and other comprehensive (loss) income.

research and development tax credit cash rebate regimes:

Small and Medium Enterprise Program ("SME, Program") and the Research and Development Expenditure Credit Program ("RDEC Program").

Tax credits related to the SME Program and RDEC Program are recorded as other operating income in the consolidated statements of operations and other comprehensive loss.

Under both schemes, the Company receives cash payments that are not dependent on the Company’s pre-tax net income levels.

Based on criteria established by Her Majesty’s Revenue and Customs, or HMRC, a portion of expenditures being carried out in relation to the Company's pipeline research and development, clinical trials management and third-party manufacturing development activities are eligible for the SME regime and the Company expects such elements of expenditure will also continue to be eligible for the SME regime for future accounting periods.

For the year ended December 31, 2020, the eleven months ended December 31, 2019 and for the year ended January 31, 2019 the Company recognized research and development tax relief in respect of the SME regime of $ 9.1 million, $ 4.7 million and $ 2.5 million, respectively, the remaining research and development credit related to the RDEC regime.

Other income (expense)

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Foreign currency gains (losses) $ 54 $ ( 1,332 ) $ 614

Based on criteria established by Her Majesty’s Revenue and Customs ("HMRC"), a portion of expenditures being carried out in relation to the Company's pipeline research and development, clinical trials management and third-party manufacturing development activities are eligible for the SME regime and the Company expects such elements of expenditure will also continue to be eligible for the SME regime for future periods.

As of December 31, 2021 and 2020, the current research and development tax credit receivable was $ 15,695 and $ 9,856 , respectively.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

CARB-X (as defined below)

In May 2021, the Company announced the selection of a new preclinical candidate, SMT-738, from the DDS-04 series for development in the fight against multi-drug resistant infections, specifically Carbapenem-resistant Enterobacteriaceae ("CRE") infections.

Simultaneously, the Company announced it had received an award from the Trustees of Boston University under the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator program ("CARB-X") to progress this candidate through preclinical development and Phase Ia clinical trials.

The award commits initial funding of up to $ 4,100 , with the possibility of up to another $ 3,700 based on the achievement of future milestones.

As of December 31, 2021, $ 485 of grant funding from CARB-X has been received, $ 96 is in accounts receivable for amounts billed, $ 574 is in other current assets as a contract asset and the Company has recognized $ 1,155 of cumulative income since contract inception.

Grant income recognized during the year ended December 31, 2021 relates to SMT-738.

Grant income recognized during the year ended December, 31, 2020 consists of income from a sub-award from CARB-X for the Company's antibiotic pipeline research and development activities specifically relating to the DDS-01 series of antibiotics, targeting Neisseria gonorrhoeae, or N.

gonorrhoeae, using the Discuva Platform.

In the fourth quarter of 2020, the Company decided not to advance the DDS-01 series and to cease work on the gonorrhoeae program, and as such, no further grant income has been received from CARB-X under this sub-award.

Other (Expense) Income

The following table sets forth the components of other (expense) income:

Year Ended December 31, 2021 Year Ended December 31, 2020

Foreign currency (loss) gain $ ( 2,135 ) $ 54

Remeasurement of liabilities (1)

2 unchanged sentences

$ ( 2,416 ) $ 283

_____________

(1) Remeasurement of liabilities during the year ended December 31, 2020, relates to a revaluation of assumed contingent liabilities for potential payments to certain employees, former employees and former directors of Discuva Limited, based on specified development and clinical milestones related to proprietary product candidates developed under the Discuva Platform (see Note 16 for further details).

Remeasurement of liabilities during the year ended January 31, 2019, relates to the remeasurement of the Company’s financial liabilities on funding arrangements relating to DMD-related U.S.

not for profit organizations following the discontinuation of the development of ezutromid in June 2018.

The components of the Company's (loss) income before income taxes for the year ended December 31, 2020, eleven months ended December 31, 2019 and year ended January 31, 2019 consisted of the following:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

The components of the Company's loss before income taxes are as follows:

Year Ended December 31, 2021 Year Ended December 31, 2020

United Kingdom $ ( 72,244 ) $ ( 51,197 )

United States ( 16,358 ) ( 1,713 )

(Loss)/profit before income taxes $ ( 52,910 ) $ ( 29,091 ) $ 9,083

Loss before income taxes $ ( 88,602 ) $ ( 52,910 )

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Significant components of the provision for income taxes are as follows:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Year Ended December 31, 2021 Year Ended December 31, 2020

Current income tax benefit:

United States $ ( 213 ) $ 36 $ 120

Total ( 213 ) 36 120

Deferred income tax benefit

United Kingdom — — ( 1,906 )

Federal United States $ — $ ( 215 )

State - United States — 2

Non-United States — —

Total — ( 213 )

Total income tax $ ( 213 ) $ 36 $ ( 1,786 )

Deferred income tax benefit for the eleven months ended December 31, 2019 and the year ended January 31, 2019, has been revised pursuant to the information included in note 3 regarding the revision and immaterial correction of an error in previously issued financial statements.

Federal - United States — —

State - United States — —

Non-United States — —

Total deferred tax — —

Total income tax benefit $ — $ ( 213 )

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

The major components of deferred tax assets and liabilities are as follows:

December 31, 2021 December 31, 2020

(in thousands)

Deferred tax assets:

Net operating loss carryforward $ 49,422 $ 29,831

Research and development credit carryforward 941 —

Stock based compensation 2,560 1,167

Other 1,477 491

Total deferred tax assets 54,400 31,489

6 unchanged sentences

Deferred tax, net $ — $ —

Deferred tax liabilities as of December 31, 2019, have been revised pursuant to the information included in note 3 regarding the revision and immaterial correction of an error in previously issued financial statements.

The Company records net deferred tax assets to the extent that these assets will more likely than not be realized.

In making such determination, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance.

Management has determined that the evidence connected with U.K.

loss carryforwards and certain US federal and state loss carryforwards do not support a conclusion of being more likely than not to be fully realized.

Accordingly, as of December 31, 2020, the Company recorded a valuation allowance of $ 29.2 million.

The increase in valuation allowance of $ 8.8 million during 2020 was primarily due to loss carryforwards.

As of December 31, 2020, the Company had approximately $ 153.9 million in U.K.

loss carryforwards available to use against future taxable profits on a year by year basis.

To the extent that taxable profits exceed £5.0 million ($6.4 million) in each year, the loss available to utilize against profits in excess of £5.0 million will be restricted to 50%.

loss carryforwards do

not lapse and therefore, the full amount will be relieved over time provided there are sufficient profits against which the losses can be utilized.

The Company also had approximately $ 1.9 million of U.S.

Federal loss carryforwards which can be carried forward for an indefinite period and used to offset 80% of taxable income in each year.

In addition, the Company has approximately $ 2.3 million in U.S.

State loss carryforwards which expire beginning 2019 through 2040.

In the Spring Budget 2020, the U.K.

Government announced that from April 1, 2020, the corporation tax rate would remain at 19% (rather than reducing to 17%, as previously enacted).

This new law was substantively enacted on March 17, 2020.

The overall effect of the change was an increase in net deferred tax assets by $ 2.3 million and an increase in valuation by an equal amount.

The reconciliation between the U.S.

statutory income tax rate for Summit and the effective income tax rates are as follows:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

corporation tax rate 21.0 % 21.0 % 21.0 %

Adjustment on adoption of ASC 606 — % — % ( 36.2 ) %

Adjustment on adoption of ASC 842 — % — % 0.1 %

For the year ended December 31, 2021 and 2020, the Company recorded a deferred tax asset of $ 54.400 and $ 31,489 respectively.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards and excess tax benefits related to stock-based compensation.

Management has considered the Company’s history of cumulative net losses in the United States ("U.S.") and the United Kingdom ("U.K."), estimated future taxable income, as well as prudent and feasible tax planning strategies, and has concluded that it is more likely than not that the Company will not realize the benefits of its U.S.

federal and state deferred tax

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

assets and U.K.

deferred tax assets.

Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2021 and 2020, respectively.

The Company reevaluates the positive and negative evidence at each reporting period.

The Company’s valuation allowance increased during 2021 by $ 22,517 primarily due to the generation of net operating loss and stock-based compensation.

As of December 31, 2021 and 2020, the Company had U.S.

Federal net operating loss carryforwards of approximately $ 1,034 and $ 232 , respectively, which may be available to offset future income tax liabilities.

The 2017 Tax Cuts and Jobs Act (“ TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely, but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended).

In addition, the Company has approximately $ 165 in U.S.

State loss carryforwards which expire through various dates through 2040 and as of December 31, 2021, the Company had an estimated U.S.

federal research and development tax credit carryforwards of $ 941 which may be available to offset future tax liabilities, and each begin to expire in 2033.

The Company also had approximately $ 191,714 in U.K.

loss carryforwards available to use against future taxable profits on a year-by-year basis (a potential deferred tax asset of $ 47,929 ).

To the extent that U.K.

taxable profits exceed £5,000 in each year, the loss available to utilize against profits in excess of £5,000 will be restricted to 50%.

loss carryforwards do not lapse and therefore, the full amount will be relieved over time provided there are sufficient profits against which the losses can be utilized.

Utilization of the U.S.

net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period.

The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation.

Any limitation may result in the loss of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

tax losses are subject to additional restrictions where there is a change in ownership in the business and certain other conditions are met.

An ownership change of a UK tax resident company would occur where (directly or indirectly) a single person acquires more than half of the ordinary share capital of a company, or two or more persons each acquire a holding of at least 5% of the ordinary share capital of a company and these holdings together amount to more than half the ordinary share capital of a company.

Where a change in ownership has occurred, and within three years prior to that change in ownership and five years afterwards, there is a major change in the nature and conduct of trade of that company or the trade of that business becomes small or negligible, any losses carried forward will be extinguished from the point of the change in ownership.

In addition, losses accrued subsequent to April 1, 2017 will be extinguished on a change of ownership when there is a major change in the nature or conduct of a company’s business, or where there is a major change in the scale of that business, or a company ceases to carry on a particular trade or business.

The Company has not completed a study to assess whether a change of ownership has occurred since its formation, or whether there has been a major change in the Company's business that would restrict the U.K.

Any limitation may result in the loss of a portion of the net operating loss carryforwards before utilization.

The 2017 Tax Cuts and Jobs Act (“2017 Act”) created a requirement that US corporations include in income earnings of certain controlled foreign corporations (“CFC”) under the global intangible low taxed income (“GILTI”) regime.

Pursuant to the FASB Staff Q&A, Topic 740 No.5.

Accounting for Global Intangible Low-taxed Income, the Company is allowed to make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as period expense only.

The Company has elected to account for GILTI in the year the tax is incurred and include the current tax impact of GILTI in the effective tax rate.

Given the Company's loss position in the U.S.

and the valuation allowance recorded against its U.S.

net deferred tax assets, these provisions have not had a material impact on the Company's consolidated financial statements.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

The Cares Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also established a Paycheck Protection Program whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs.

The Company considered the provisions under the CARES Act and elected not to take advantage of the provisions of the CARES Act as the effect of such provisions was not expected to have a material impact on the Company’s results of operations, cash flows, and consolidated financial statements.

During 2021, the U.K.

Government announced that from April 1, 2023, the corporation tax rate would increase to 25%.

This new law was enacted on June 10, 2021.

The overall effect of the change was an increase in net deferred tax assets by $ 9,311 and an increase in valuation allowance by an equal amount.

A reconciliation of the Company's effective tax rate to the U.S.

federal statutory rate is as follows:

Year Ended December 31, 2021 Year Ended December 31, 2020

federal income tax statutory rate 21.0 % 21.0 %

Change in valuation allowance ( 10.5 ) % ( 12.1 ) %

Non-deductible expenses ( 0.4 ) % ( 3.9 ) %

Refundable R&D tax credit ( 7.0 ) % ( 6.5 ) % ( 23.8 ) %

Overseas profits taxed at different rates 0.9 % ( 4.7 ) % ( 2.8 ) %

Refundable research and development tax credit ( 8.3 ) % ( 7.0 ) %

Effect of foreign operations taxed at various rates 0.5 % 0.9 %

Stock-based compensation ( 1.6 ) % — %

Other ( 0.7 ) % 1.4 %

Release of temporary difference relating to intangible assets — % — % ( 20.9 ) %

Reported effective income tax rate 0.3 % ( 0.2 ) % ( 19.7 ) %

In the U.K., the Company is entitled to a research and development tax relief for small and medium-sized enterprises which allows the Company an enhanced deduction rate of 230% on qualifying research and development expenditure (the tax relief).

1 unchanged sentence

As the realization of the tax relief does not depend on generation of future taxable income or the Company's ongoing tax status or tax position, the Company does not consider the tax relief as an element of income tax accounting under ASC 740.

For the year ended December 31, 2020, the eleven months ended December 31, 2019 and for the year ended January 31, 2019, the Company recognized research and development tax relief of $ 9.1 million, $ 4.7 million and $ 2.5 million, respectively, which is included in other operating income in the consolidated statements of operations and other comprehensive (loss) income.

For the year ended December 31, 2021 and 2020, the Company recognized research and development tax relief of $ 15,206 and $ 9,363 respectively, which is included in other operating income in the consolidated statements of operations and other comprehensive loss.

It is the intention of the Company to reinvest the earnings of its non-U.S.

subsidiaries in those operations and not to repatriate the earnings to the U.S.

Accordingly, the Company does not provide for deferred taxes on differences between financial reporting and tax basis in its investments in foreign subsidiaries as they are considered permanent in duration or are not expected to reverse in the foreseeable future.

The Company does not have any uncertain tax positions as of December 31, 2021.

In the U.K., tax returns for the periods January 31, 2019 and December 31, 2019 remain subject to examination by Her Majesty's Revenue and Customs.

In the U.S., tax years from 2018 remain subject to examination by Internal Revenue Service.

(Loss) earnings per share

The calculation of (loss) earnings per share is based on the following data:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands, except per share data)

Net (loss) profit $ ( 52,697 ) $ ( 29,127 ) $ 10,869

In the U.K., tax returns for the year ended December 31, 2020 remains subject to examination by HMRC.

In the U.S., the Company files income tax returns in various states.

In the U.S., tax years from 2018 remain subject to examination by the U.S.

Internal Revenue Service and state tax authorities.

The Company is not currently under examination by the Internal Revenue Service or any other jurisdiction for years 2018 through present.

To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as part of its income tax provision.

As of December 31, 2021, and 2020, the

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Company has recorded no liability for unrecognized tax benefits, interest, or penalties related to federal, state or foreign income tax matters.

Loss per Share

The following table sets forth the computation of basic and diluted net loss per share:

Year Ended December 31, 2021 Year Ended December 31, 2020

Net loss $ ( 88,602 ) $ ( 52,697 )

Basic weighted average number of shares of common stock outstanding 92,239,306 69,524,148

Dilutive potential common shares — — 89

Diluted weighted average number of shares of common stock outstanding 92,239,306 69,524,148

Basic (loss) earnings per share from operations ( 0.76 ) ( 0.89 ) 0.63

Diluted (loss) earnings per share from operations ( 0.76 ) ( 0.89 ) 0.63

Anti-dilutive shares excluded from diluted earnings per share 9,521 13,403 1,715

Basic loss per share has been calculated by dividing the (loss) earnings for the period by the weighted average number of shares outstanding during period.

Diluted earnings per share has been calculated by adjusting the weighted average number of shares of common stock outstanding to assume conversion of all potentially dilutive share options and warrants using the treasury stock method.

In calculating diluted earnings per share, the dilutive effect of share options and warrants is computed using the average market price for the respective period.

Basic net loss per share $ ( 0.96 ) $ ( 0.76 )

Diluted net loss per share $ ( 0.96 ) $ ( 0.76 )

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period.

Diluted net loss per share is computed by dividing the diluted net loss by the weighted-average number of common shares outstanding for the period, including potentially dilutive common shares.

The dilutive effect of share options and warrants are determined under the treasury stock method using the average market price for the period.

In addition, the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of stock options and warrants that are in-the-money.

Potential shares related to certain of the Company’s outstanding stock options and warrants were excluded because they were anti-dilutive.

December 31, 2020 December 31, 2019

(In thousands)

Goodwill - beginning of year $ 1,961 $ 1,951

Impairment — —

Currency translation 69 10

Goodwill - end of year $ 2,030 $ 1,961

Goodwill was recognized in respect of acquisitions of Discuva Limited and MuOx Limited.

Goodwill as of December 31, 2019, January 31, 2019 and January 31, 2018, has been revised pursuant to the information included in note 3 regarding the revision and immaterial correction of an error in previously issued financial statements.

The Company determines that the carrying value of goodwill associated with Discuva Limited December 31, 2020 is not impaired as, based on a qualitative assessment, the fair value of the reporting unit exceeds its carrying value.

As a result of the Company's decision in June 2018 to discontinue development of ezutromid, management concluded that this was an indication of both goodwill and intangible asset impairment associated with the acquisition of MuOx Limited which related to the utrophin program acquired .

The Company determined the fair value of the reporting unit by using a discounted cash flow methodology, which is largely based on assumptions about future events that may or may not occur as anticipated, and such deviations could have a significant impact on the estimated fair value of the reporting unit.

These assumptions included, but were not limited to, estimates of discount rates, future growth rates and terminal values for each reporting unit.

Based on this review, it was determined that the fair value of MuOx Limited was $ nil as there would be no future cash flows attributable to the reporting unit, resulting in a goodwill impairment charge of $ 0.9 million being recognized during the year ended January 31, 2019.

See note 12 for details of the intangible asset impairment.

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all potential common share equivalents outstanding would have been anti-dilutive.

The following potentially dilutive securities were excluded from the computation of the diluted net loss per share of common stock for the periods presented because their effect would have been anti-dilutive:

Restricted stock units — 26,923

Options to purchase common stock 13,797,556 3,672,968

Warrants 5,821,137 5,821,137

Shares expected to be purchased under employee stock purchase plan 202,045 —

19,820,738 9,521,028

Goodwill and Intangible Assets

Goodwill is measured as the excess of the cost of the acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed.

The Company assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition.

Typically acquisitions related to a single reporting unit do not require the allocation of goodwill to multiple reporting units.

If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Goodwill and purchased intangible assets are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment.

The Company regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends and lower projections of profitability that may impact future operating results.

The Company’s annual evaluation for impairment of goodwill consists of one reporting unit.

In accordance with the Company’s policy, the Company completed its annual evaluation for impairment in the fourth quarter of 2021 using the qualitative assessment.

No impairment charge was recognized for the year ended December 31, 2021 and there have been no cumulative goodwill impairment charges recognized to date.

As of December 31, 2021 and 2020, goodwill was $ 2,009 and $ 2,030 , respectively and represents goodwill recognized from the acquisition of Discuva Limited in December of 2017.

Changes year over year are the result of foreign currency movements.

Intangible Assets

December 31, 2020 December 31, 2019

Gross carrying amount Accumulated amortization and impairment Net Gross carrying amount Accumulated amortization and impairment Net

(In thousands)

Components of the Company's acquired intangible assets are comprised of the following:

December 31, 2021

Gross Accumulated amortization and impairment charges Net

Utrophin program acquired $ 4,487 $ ( 4,487 ) $ —

3 unchanged sentences

$ 19,963 $ ( 9,564 ) $ 10,399

December 31, 2020

Gross Accumulated amortization and impairment charges Net

Utrophin program acquired $ 4,534 $ ( 4,534 ) $ —

Discuva platform acquired 14,565 ( 3,050 ) 11,515

Option over non-financial asset (1)

921 ( 921 ) —

Other patents and licenses 150 ( 150 ) —

$ 20,170 $ ( 8,655 ) $ 11,515

(1) During the year ended December 31, 2020, management identified an impairment related to the option over non-financial asset pursuant to an Evaluation and Option Agreement with a collaboration partner.

The partner is no longer conducting antibiotic candidate programs over which the Company had the option, management therefore determined that the fair value of the option to acquire the assignment of the proprietary rights for antibiotic candidates is $ nil .

Accordingly, the asset was written off in its entirety resulting in an impairment charge of $ 0.9 million.

As discussed in note 11, management concluded that the Company's decision in June 2018 to discontinue development of ezutromid was an indication of both goodwill and intangible asset impairment and hence reviewed the assets associated with the acquisition of MuOx Limited which related to the utrophin program acquired.

Based on this review, an intangible asset impairment charge of $ 4.4 million related to the utrophin program acquired was recognized during the year ended January 31, 2019.

Following this impairment charge, there was no remaining net book value associated with the Utrophin program.

Amortization expense was $ 1.3 million, $ 1.0 million and $ 1.1 million, for the periods ending December 31, 2020, December 31, 2019 and January 31, 2019, respectively.

Estimated future amortization expense related to intangible assets held at December 31, 2020 and 2019 is $ 1.0 million for each of the years from 2021 to 2025.

Accordingly, the asset was written off in its entirety resulting in an impairment charge of $ 859 recognized in operating expenses.

Amortization expense was $ 1,017 and $ 1,250 for the years ended December 31, 2021 and 2020, respectively.

The weighted-average remaining life at December 31, 2021 for our Discuva platform intangible asset was approximately 10.4 years.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The estimated net amortization expense related to acquired intangible assets for future years is:

Thereafter $ 5,404

Property and Equipment

1 unchanged sentence

December 31, 2021 December 31, 2020

(In thousands)

Laboratory equipment $ 2,626 $ 759

Office and IT equipment 804 654

Furniture and fixtures, office equipment and software 1,081 804

Leasehold improvements 364 291

Property and equipment, gross 4,071 1,854

Less accumulated depreciation 1,129 1,024

accumulated depreciation 3,377 1,129

Property and equipment, net $ 694 $ 725

Depreciation expense for the periods ending December 31, 2020, December 31, 2019 and January 31, 2019 was $ 0.3 million, $ 0.3 million and $ 0.4 million, respectively.

For additional details regarding the right-of-use assets under the Company’s lease agreements see Note 17 Leases.

Depreciation expense for the years ended December 31, 2021 and 2020 was $ 330 and $ 302 , respectively.

Research and Development Prepaid Expenses and Accrued Liabilities

Included within prepaid expenses at December 31, 2020, is $ 8.5 million (December 31, 2019:

$ 7.7 million) of prepayments relating to research and development expenditure.

Included within accrued liabilities at December 31, 2020 is $ 1.5 million (December 31, 2019:

$ 3.2 million) relating to research and development expenditure.

Included within prepaid expenses at December 31, 2021 and 2020 is $ 6,138 and $ 8,490 , respectively, of prepayments relating to research and development expenditures.

Included within accrued liabilities at December 31, 2021 and 2020 is $ 5,226 and $ 1,502 , respectively, relating to research and development expenditures.

1 unchanged sentence

The key sensitivity is the estimated current stage of completion of each study or activity, which is based on information received from the supplier and the Company's operational knowledge of the work completed under those contracts.

If the estimated stage of completion of each study or activity increased by 5% then the aggregate increase in accruals and decrease in prepayments would result in an overall increase in total research and development expenses of $ 1.9 million.

If the estimated stage of completion decreased by 5%, then the aggregate decrease in accruals and increase in prepayments would result in an overall decrease in total research and development expenses of $ 2.3 million.

In all cases, the full cost of each study or activity is expensed by the time the final report or where applicable, product, has been received.

Financial Liabilities on Funding Arrangements

The Company entered into charitable funding arrangements with the Wellcome Trust and the U.S.

not for profit organizations, the Muscular Dystrophy Association ("MDA") and Duchenne Partners Fund ("DPF").

In exchange for the funding provided, these arrangements required the Company to pay royalties on potential future revenues generated from the CDI and DMD programs respectively or transfer the rights over unexploited intellectual property.

Because of the Company's decision in June 2018 to discontinue the development of ezutromid, the financial liabilities attributable to the charitable funding arrangements with MDA and DPF were remeasured during the year ended January 31, 2019, as future royalties on revenues generated from the DMD program are no longer anticipated.

This remeasurement resulted in a credit to the Statement of operations and comprehensive (loss) income.

The portion of the credit presented as other operating income during the year ended January 31, 2019, represents the component of the funding received from MDA and DPF not previously credited to the consolidated statement of operations and comprehensive (loss) income upon initial recognition of the financial liability.

The portion of the credit presented as a remeasurement of financial liabilities on funding arrangements during the year ended January 31, 2019, relates to previous remeasurements and discounting associated with the financial liability which were previously recognized as finance costs.

As such, the value of the estimated financial liabilities for funding arrangements as of December 31, 2020 and 2019, amounted to $ nil .

As the Company discontinued the development of ezutromid, there are no sensitivities disclosed in relation to the charitable funding arrangements with MDA and DPF, since there are no reasonably possible changes in assumptions that would result in a different value of the liability as of December 31, 2020 or 2019.

Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts and other receivables, accounts payable and contingent considerations.

The Company believes that the recorded values of cash and cash equivalents, accounts and other receivables and accounts payable approximate their current fair values because of their nature and respective maturity dates or durations.

The fair value of the contingent consideration liability as of December 31, 2020 is $ nil (December 31, 2019:

$ 0.1 million) and is determined based on “Level 3” inputs.

The contingent consideration relates to the acquisition of Discuva Limited in December 2017 based on the terms of the share purchase agreement.

During the year ended December 31, 2020, the Company reassessed the contingent consideration in line with the anticipated settlement of consideration liability and determined no further payments were required under the agreement.

The remaining balance of $ 0.1 million was reversed to the consolidated statement of operations and comprehensive loss.

During the year ended December 31, 2020 and eleven months ended December 31, 2019, payments of $ nil and $ 0.7 million were made during the periods respectively.

The fair value of the contingent consideration was measured using the discounted cashflow forecast model.

The expected payments were primarily due to research and development tax credits received and receivable by Discuva in respect to financial years prior to the Company's acquisition, of which the sellers were due a specified portion of these amounts.

The following table is a reconciliation of Level 3 liabilities recorded at fair value using significant unobservable inputs:

(In thousands)

Balance January 31, 2019 $ 825

Payments ( 703 )

Foreign currency translation ( 17 )

Balance December 31, 2019 $ 105

Release of liability ( 105 )

Balance December 31, 2020 $ —

The Company has two operating leases relating to its U.K.-leased properties in Oxford and Cambridge that are within the scope of ASC 842.

A summary of these leases is as follows:

• In February 2017, the Company entered into a 10 -year lease agreement for its office premises in Oxford, U.K.

The lease contains a break clause with the option to terminate the lease on the fifth anniversary of the agreement.

The Company does not factor in the period covered by the break clause when accounting for this lease.

• In December 2017, the Company entered into a 4 -year lease agreement for its office and lab premises in Cambridge, U.K.

The lease contains a break clause with the option to terminate the lease on the second anniversary of the agreement.

The Company factors in the period covered by the break clause when accounting for this lease, as the break clause notice period has now passed and was not exercised by the Company.

The adoption of ASC 842 resulted in the recognition of lease liabilities and right-of-use assets.

The carrying value of the right-of-use assets as of December 31, 2020, is $ 0.6 million (December 31, 2019:

$ 1.0 million).

Future minimum lease payments under non-cancellable operating leases as of December 31, 2020 were as follow:

(in thousands)

Total minimum lease payments 477

The Company has operating leases for real estate.

The Company does not have any finance leases.

During the year ended December 31, 2021, the Company recorded $ 3,389 of additional right-of-use assets of which $ 2,359 related to two new leases that commenced during the period for its Menlo Park, California, U.S.

and Sawston, U.K.

locations and $ 1,030 which related to one lease that was extended during the period for its Oxfordshire, U.K location.

The carrying value of the right-of-use assets as of December 31, 2021 and 2020 is $ 2,790 and $ 554 , respectively.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The elements of lease expense were as follows:

Year Ended December 31, 2021 Year Ended December 31, 2020

Fixed lease costs $ 785 $ 478

Variable lease costs 164 171

Short-term lease 278 272

Total lease cost $ 1,227 $ 921

The weighted average discount rate and the weighted average remaining lease term were 2.5 % and 3.9 years, respectively, as of December 31, 2021.

The weighted average discount rate and the weighted average remaining lease term were 3.75 % and 1.1 years, respectively, as of December 31, 2020.

Future lease payments under non-cancelable leases as of December 31, 2021 are detailed as follows:

Year Ending December 31, Amount

Total lease payments 2,948

imputed interest 166

Present value of lease liabilities $ 465

Total operating lease liabilities $ 2,782

Total operating lease liabilities balance sheet presentation:

Current lease liabilities $ 1,091

Non-current lease liabilities 1,691

The weighted average remaining lease term is 1.1 years (December 31, 2019:

The weighted average discount rate is 3.75 % (December 31, 2019:

Lease payments consist primarily of fixed payments.

The following table contains a summary of the lease costs recognized and other information pertaining to the Company’s leases for the periods ending December 31, 2020, December 31, 2019 and January 31, 2019:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

(in thousands)

Operating lease cost $ 478 $ 447 $ 501

Other information

Cash paid for amounts included in the measurement of operating lease liabilities $ 488 $ 435 $ 369

Amounts presented above do not include payments related to the Company's Cambridge, Massachusetts, United States office where the lease term is month to month and therefore was not capitalized on the balance sheet.

Other Non-Current Liabilities

Included within other non-current liabilities at December 31, 2020 is $ 2.3 million (December 31, 2019:

$ 2.4 million) relating to assumed contingent liabilities.

Included within other non-current liabilities at December 31, 2021 and 2020 is $ 2,531 and $ 2,263 , respectively, relating to assumed contingent liabilities.

As part of the acquisition of Discuva Limited in December 2017, the Company assumed certain contingent liabilities as certain employees, former employees and former directors of Discuva Limited are eligible for payments from Discuva Limited based on specified development and clinical milestones related to proprietary product candidates developed under the Discuva Platform.

The timing of these potential payments is uncertain.

The contingent liability was remeasured in the third quarter of 2020 to reflect a change in the timing of expected payments following the Company's decision not to advance the DDS-01 series of antibiotics and to cease work on the gonorrhea program.

The gain on remeasurement of the liability is included within other income (expense) in the Consolidated Statement of Operations and Comprehensive (Loss) Income.

The table below describes the value of the assumed contingent liabilities as of December 31, 2020, of $ 2.3 million compared to what the total value would be following the presented variations to the underlying assumptions in the model:

December 31, 2020

Estimated assumed contingent liabilities

(In thousands)

1% lower discount rate

1% higher discount rate

10% lower probability of success

10% higher probability of success

The gain on the remeasurement of the liability recognized during the year ended December 31, 2020 of $ 480 is included within other (expense) income in the consolidated statements of operations and comprehensive loss.

There were no remeasurement losses or gains recognized during the year ended December 31, 2021.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Stockholders' Equity

Reverse Stock Split

In conjunction with the Company’s Redomiciliation, the Company acquired all of the outstanding ordinary shares of Summit Therapeutics, plc on the basis of one share of the Company’s common stock for every 5 ordinary shares outstanding, which had the effect of a 1-for-5 reverse stock split.

On the effective date of the Redomiciliation, the number of outstanding shares was reduced from 335.9 million to 67.2 million.

All share and per share amounts in these consolidated financial statements and related notes for periods prior to the Redomiciliation have been retroactively adjusted to reflect the effect of the exchange ratio.

On November 6, 2020 the Company closed on a fundraising of $ 50.0 million through the issuance and sale in a private placement of shares of common stock to Mr.

Duggan and other existing stockholders of the Company.

The Company issued 14,970,060 shares of common stock at a price of $ 3.34 per share and received gross proceeds of $ 50.0 million.

All new shares of common stock rank pari passu with existing shares of common stock.

On December 24, 2019, the Company completed an equity placing, issuing 35,075,690 new shares of common stock at a price of $ 1.43 to existing investors.

Total gross proceeds of $ 50.0 million were raised and directly attributable transaction costs $ 0.9 million were incurred.

All new shares of common stock rank pari passu with existing shares of common stock.

As part of the equity placing on December 24, 2019, the participating investors were granted warrants with the right to subscribe for 5,261,350 new shares of common stock at an exercise price of $ 1.58 , exercisable any time in the period commencing on the date falling six months following December 24, 2019 and ending on the tenth anniversary of admission.

In conjunction with the Company’s Redomiciliation Transaction in (as defined in Note 1 ), the Company acquired all of the outstanding ordinary shares of Summit Therapeutics plc on the basis of one share of the Company’s common stock for every 5 ordinary shares outstanding, which had the effect of a 1-for-5 reverse stock split.

On the effective date of the Redomiciliation, the number of outstanding shares was reduced from 336,159,511 to 67,231,903 .

All share and per share amounts in these consolidated financial statements and related notes for periods prior to the Redomiciliation Transaction have been retroactively adjusted to reflect the effect of the exchange ratio.

On May 12, 2021, the Company closed its rights offering, which was fully subscribed and received aggregate gross proceeds of $ 75,000 from the sale of 14,312,976 shares of common stock to existing investors at a price per share of $ 5.24 .

Offering costs of $ 159 were incurred.

In connection with the closing of the rights offering, the Second Note (see Note 20) matured and became due and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from the rights offering.

On November 6, 2020 the Company completed a private placement of its common stock and received gross proceeds of $ 50,000 from the issuance and sale of 14,970,060 shares of common stock to Mr.

Duggan and two other existing shareholders of the Company at a price of $ 3.34 per share.

Offering costs of $ 48 were incurred.

On December 24, 2019, the Company completed a private placement of its common stock, and received aggregate gross proceeds of $ 50,000 from the issuance and sale of 35,075,690 shares of common stock to existing investors at a price of $ 1.43 per share.

Offering costs of $ 912 were incurred.

As part of the private placement on December 24, 2019, the participating investors were granted warrants with the right to subscribe for 5,261,350 shares of common stock at an exercise price of $ 1.58 , exercisable any time in the period commencing on the date falling six months following December 24, 2019 and ending on the tenth anniversary of admission.

Each warrant entitles the warrant holder to subscribe in cash for one share.

1 unchanged sentence

The Company has the option to require the warrant holder to exercise some or all of the outstanding warrants after the third anniversary date if the ten-day volume weighted average price of the shares of common stock as reported on Nasdaq represents a premium of at least 50 percent to the exercise price.

The warrants are classified within stockholders’ equity as they are indexed to the Company's shares of common stock and require settlement in its shares of common stocks with no provision for any cash settlement.

Warrants granted over shares of comment stock to consultants in exchange for certain services are similar to stock based compensation, further details on these warrants can be found in note 20.

The Company has total warrants outstanding of 5,821,137 as of December 31, 2020 (December 31, 2019:

No dividends were paid or declared during year ended December 31, 2020, eleven months ended December 31, 2019 and the year ended January 31, 2019.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss:

Foreign currency translation adjustment

(In thousands)

Balance, January 31, 2018 $ ( 4,319 )

Other comprehensive income ( 496 )

Balance, January 31, 2019 $ ( 4,815 )

Other comprehensive loss 51

Balance, December 31, 2019 $ ( 4,764 )

Other comprehensive loss 970

Balance, December 31, 2020 $ ( 3,794 )

The warrants are classified within stockholders’ equity as they are indexed to the Company's shares of common stock and require settlement in its shares of common stock with no provision for any cash settlement.

Also, as part of the private placement on December 24, 2019, certain consultants were granted warrants with the right to subscribe for 3,358,732 shares of common stock in exchange for certain services.

The warrants have an exercise price of $ 1.44 and vest quarterly over three years .

If the consulting agreement terminated prior to three years after the date of the grant, all unvested warrants will be deemed cancelled.

On June 30, 2020, the consulting agreement was terminated and 2,798,945 warrants cancelled immediately.

The remaining 559,787 of outstanding warrants are held by Dr.

Maky Zanganeh and Dr.

Elaine Stracker (see Note 20).

Warrants granted over shares of common stock to consultants in exchange of certain services are similar to stock-based compensation (see Note 18).

The Company had 5,821,137 total warrants outstanding as of December 31, 2021 and 2020, respectively, and an intrinsic value of $ 6,559 as of December 31, 2021 and $ 18,260 as of December 31, 2020.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company has never declared or paid cash dividends on its shares of common stock or on Summit Therapeutics plc's ordinary shares.

The Company currently intends to retain all of its future earnings to fund the development and expansion of its business.

Stock-Based Compensation

2016 Long Term Incentive Plan

In September 2020, in conjunction with the Redomiciliation, the 2016 Long Term Incentive Plan, (the "2016 Plan") and the Company's outstanding restricted stock units ("RSUs") were assumed and adopted by Summit Therapeutics Inc.

and all awards were exchanged with replacement awards issued.

Subsequent to the Redomiciliation, no additional grants will be made under the 2016 Plan and any outstanding awards under the 2016 Plan and RSUs will continue with their original terms.

The Company concluded that the adoption of the 2016 Plan and RSUs and issuance of replacement awards was a modification but with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award.

The Company concluded that the adoption of the 2016 Plan and RSUs and issuance of replacement awards was a modification but with no change in the material rights and preferences and therefore, no recorded change in the fair value of each respective award is needed.

2020 Stock Award Plan

1 unchanged sentence

The 2020 plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

Upon the effectiveness of the 2020 Plan, the Company ceased granting awards under its 2016 Plan (the “2016 Plan” together with the 2020 Plan, the “Plans”).

Upon the effectiveness of the 2020 Plan, the Company ceased granting awards under its 2016 Plan.

A total of 8,000,000 shares of common stock were initially reserved for issuance under the 2020 Plan.

Additionally, up to 5,000,000 shares of common stock can be added to the 2020 Plan for future issuance from options that expire, lapse unexercised or are terminated from the 2016 Plan or any other predecessor plans.

Additionally, up to 5,000,000 shares of common stock, including RSUs can be added to the 2020 Plan for future issuance from options that expire, lapse unexercised or are terminated from the 2016 Plan or any other predecessor plans.

The number of shares of common stock that may be issued under the 2020 Plan will automatically increase on each January 1, beginning in 2021 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2030, equal to the lesser of (i) 6,400,000 shares of common stock, (ii) 4 % of the common shares outstanding on the final day of the immediately preceding calendar year and (iii) an amount as determined by the Company’s Board of Directors.

As of December 31, 2020, 4,650,091 shares remained available for future grant under the 2020 Plan.

On January 1, 2021, the Company increased the number of shares to be issued by 3,303,002 shares, which represented 4 % of the common shares outstanding on December 31, 2020.

After the annual increase, there are 7,953,093 shares available to be issued under the 2020 Plan.

2020 Employee Share Purchase Plan

In September 2020, the Company’s board of directors approved the 2020 Employee Share Purchase Plan (the “2020 ESPP”), which became effective on September 21, 2020.

A total of 1,000,000 common shares were initially reserved for issuance under the 2020 ESPP.

The number of common shares that may be issued under the 2020 ESPP will automatically increase on each January 1, beginning in 2021 and continuing for each fiscal year until, and including the fiscal year beginning January 1, 2030 equal to the lesser of (i) 1,600,000 shares of common stock, (ii) 1 % of the common shares outstanding on the final day of the immediately preceding calendar year and (iii) an amount as determined by the Company’s board of directors.

As of December 31, 2020, 1,000,000 common shares were available to be issued under the ESPP.

Stock Options

The grant-date fair value of the Company’s stock option awards issued to employees and directors was calculated using the Black-Scholes option-pricing model, based on the following weighted-average assumptions:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended January 31, 2019

As of December 31, 2021, there are 2,293,700 shares available to be issued under the 2020 Plan.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the "2020 ESPP") was adopted by the Board of Directors and approved by the Company's shareholders on July 17, 2020 and approved by the predecessor company shareholders on August 19, 2020.

The 2020 ESPP initially authorized the issuance of up to 1,000,000 shares of common stock to participating employees.

The number of common shares that may be issued under the 2020 ESPP automatically increases on each fiscal year commencing January 1, 2021 and continuing for each fiscal year until, and including the fiscal year commencing on, January 1, 2030 equal to the least of (i) 1,600,000 shares of common stock, (ii) 1 % of the common shares outstanding on such date and (iii) an amount as determined by the Company’s Board of Directors.

As of December 31, 2021, there were 1,825,750 shares available to be issued under the 2020 ESPP.

The first offering period of the 2020 ESPP plan consists of seven months , commenced on August 2, 2021 and will terminate on February 28, 2022.

Offering periods thereafter will be six months in duration and will commence immediately proceeding the end of the previous offering period, unless otherwise determined by the Board of Directors or Compensation Committee.

The next offering period commenced on March 1, 2022.

Under the 2020 ESPP, eligible employees can purchase shares of common stock through payroll deductions of up to 15 % of their compensation received during the plan period or such shorter period during which deductions from payroll are made, up to a defined maximum amount.

The option price is determined based on the lesser of the closing price of common stock on (i) the first business day of the plan period or (ii) the exercise date, or shall be based solely on the closing price of the common stock on the exercise date;

provided that such option price shall be at least 85 % of the applicable closing price.

In the absence of a determination by the Board of Directors or the Compensation Committee, the

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

option price is 85 % of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date.

The closing price is the (a) the closing price (for the primary trading session) on the Nasdaq Global Select Market or (b) the average of the closing bid and asked prices in the over-the-counter-market, whichever is applicable, as published in the Wall Street Journal or another source selected by the Board or the Committee.

Stock Option Valuation

The Company estimates the fair value of stock options granted to employees and directors using the Black-Scholes valuation model.

Stock options granted under the 2016 and 2020 Plans generally vest over three or four years and expire after ten years .

This valuation methodology utilizes several key assumptions as highlighted below.

The assumptions used in the Company's valuation are summarized as follows, presented on a weighted average basis:

Year Ended December 31, 2021 Year Ended December 31, 2020

Risk-free interest rate 1.05 % 0.29 %

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Expected volatility 74.5 % 71.9 %

Expected dividend yield zero zero zero

The following table summarizes stock option activity for the year ended December 31, 2020:

` Number of share options Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value (in thousands)

Outstanding at December 31, 2019 4,644,835 $ 1.80

Expected annual dividends per share — % — %

The following table summarizes the Company's stock option activity for the year ended December 31, 2021:

Number of share options Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value

Outstanding as of December 31, 2020 3,672,968 $ 2.90 8.9 years $ 6,641

Granted 13,262,016 $ 5.76

1 unchanged sentence

Exercised ( 1,124,577 ) $ 2.74

Outstanding at December 31, 2020 3,672,968 $ 2.90 8.9 years $ 6,641

Vested and Expected to Vest at December 31, 2020 3,488,858 $ 2.89 8.9 years $ 6,325

Outstanding as of December 31, 2021 13,797,556 $ 5.55 8.6 years $ 712

Outstanding as of December 31, 2021 - vested and expected to vest 12,685,817 $ 5.51 8.6 years $ 709

Exercisable at December 31, 2021 1,598,709 $ 3.60 7.2 years $ 406

The weighted-average grant-date fair value of stock options granted during the year ended December 31, 2020, the eleven months period ended December 31, 2019 and year ended January 31, 2019, was $ 2.20 , $ 0.65 and $ 2.00 , respectively, per share.

The aggregate intrinsic value of the Company's stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during the year ended December 31, 2020 and the eleven months

period ended December 31, 2019, was $ 0.9 million and zero , respectively.

There were no stock option exercises in the eleven months ended December 31, 2019 as the market value was below the exercise price.

During the year ended December 31, 2020, the Company granted 7,865,676 stock options subject to performance based conditions, of which 5,562,500 stock options are outstanding at December 31, 2020.

As of December 31, 2020, the performance conditions had not been agreed and communicated and therefore a grant date has not yet been established.

As such, these performance based stock options have been excluded from the summary of stock option activity above and no expense has been recorded in the consolidated statement of operations.

During the year ended January 31, 2019, the former executive director, key management and employees voluntarily surrendered options to subscribe for a total of 1,434,410 shares of common stock.

This cancellation resulted in an accelerated stock-based payment expense of the remaining fair value of those awards during the year ended January 31, 2019.

At December 31, 2020, there was $ 3.8 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-average period of 3.6 years.

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $ 3.50 and $ 2.20 , per share, respectively.

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and December 31, 2020 was $ 3,744 and $ 857 , respectively.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

As of December 31, 2021, total unrecognized compensation cost related to unvested stock option grants was approximately $ 27,905 .

This amount is expected to be recognized over a weighted average period of approximately 2.2 years.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

In September 2021, the Compensation Committee of the Board of Directors approved a modification to the Company's outstanding performance-based stock option awards for active employees which removed the performance-based vesting criteria from these awards.

Following this modification, the option awards are subject only to previously existing time-based vesting conditions.

The Company accounted for this change as a modification in accordance with the requirements of Accounting Standards Codification Topic 718.

As a result, 9,250,000 options, related to twenty-five employees, that were previously authorized that had not achieved a grant date became granted on September 24, 2021 relating to the modification.

The Company will recognize the newly assessed measurement date fair value of the awards as compensation expense over the remaining vesting period.

The incremental compensation expense related to the modification for the year ended December 31, 2021 was $ 4,872 .

The stock option activity above incorporates the modified awards.

Restricted Stock Units

1 unchanged sentence

The following table summarizes the activity relating to RSUs for the year ended December 31, 2021:

Number of shares Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value

(in thousands)

Outstanding at January 1, 2020 138,461 $ 0.07

Exercised during the year ( 111,538 ) $ 0.07

Number of RSUs outstanding at December 31, 2020 26,923 $ 0.07 0.1 years $ 125

Vested at December 31, 2020 26,923 $ 0.07 0.1 years $ 125

No RSUs were granted during the year ended December 31, 2020.

The weighted-average grant-date fair value of stock options granted during the eleven months period ended December 31, 2019 was $ 1.62 a per share.

At December 31, 2020, there was no unrecognized compensation expense related to RSU's as the requisite service period was completed in a prior year.

The assumptions used in the valuation on grant date are as follows:

Date of grant Exercise

price Share price

date Fair value

(years) Risk free

rate Volatility

January 11, 2019 $ 0.07 $ 1.65 $ 1.60 1 year 0.79 % 57.00 %

Consultant Warrants

As part of the equity placing on December 24, 2019, participating investors were granted warrants with the right to subscribe for 3,358,732 new shares of common stock to a consultant in exchange for certain services.

The warrants have an exercise price of $ 1.44 and vest quarterly over three years .

If the consulting agreement terminates prior to three years after the date of the grant, all unvested warrants will be deemed lapsed.

On June 30, 2020 the consulting agreement was terminated and 2,798,945 warrants lapsed immediately.

The fair value of shares of common stock involved is estimated on the date of grant using Black-Scholes valuation methodology that uses the assumptions noted in the following table.

Because Black-Scholes valuation methodology incorporate ranges of assumptions for inputs, those ranges are disclosed.

Number of Shares Weighted Average Grant Date Fair Value

RSUs - beginning of period 26,923 $ 1.60

Vested ( 26,923 ) $ 1.60

RSUs - end of period — $ —

The aggregate intrinsic value of restricted stock units vested during the years ended December 31, 2021 and December 31, 2020 was $ 125 , respectively.

The fair value of warrants is estimated on the date of grant using the Black-Scholes valuation methodology.

Expected volatilities are based on historical share price performance, weighted to exclude periods of unusually high volatility.

The Company assumed the warrant to be exercised immediately on vesting.

The Company assumed the warrants to be exercised immediately on vesting.

The risk-free rate is equal to the prevailing U.K.

Gilts rate at grant date that most closely matches the expected term of the grant.

Expected dividend yield is zero , consistent with the Directors’ view that the Company’s business model is to generate value through capital growth rather than the payment of dividends.

As of December 31, 2020, 559,787 of consultant warrants were vested and had an intrinsic value of $ 1.82 million.

These consultant warrants outstanding at December 31, 2020, had a weighted average exercise price of $ 1.44 and a weighted average remaining contractual life of 4.5 years.

Gilts rate at grant date that most closely matches the expected term of the grant, as the warrants were issued prior to the Redomiciliation.

Expected dividend yield is zero , and consistent with the Board of Directors’ view that the Company’s business model is to generate value through capital growth rather than the payment of dividends.

Each warrant entitles the warrant holder to subscribe in cash for one share.

Shares of common stock allotted pursuant to the exercise of the warrant will rank in full for all dividends and other distributions with a record date after the exercise date with the shares of common stock in issue at that date.

As of December 31, 2021, 5,821,137 warrants were granted, of which 559,787 warrants were granted to consultants and 5,261,350 warrants were granted to investors (refer to Note 20 for further details).

All warrants are considered vested at December 31, 2021, have a weighted-average exercise price of $ 1.56 , an aggregate intrinsic value of $ 6,559 , and a weighted average remaining contractual life of 4.0 years.

At December 31, 2021, there was no unrecognized compensation expense related to warrants.

The fair value per consultant warrant granted and the assumptions used in the calculations are as follows:

Date of grant Exercise

price Share price

date Fair value

(years) Risk free

rate Volatility

December 24, 2019 1.44 1.37 0.95 5.38 0.10 % 73.00 %

The Company recorded stock‑based compensation expense for options granted to consultants of $ 0.5 million and $ 0.02 million during the year ended December 31, 2020 and eleven months ended December 31, 2019, respectively.

Stock‑based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:

Year ended December 31, 2020 Eleven months ended December 31, 2019 Year ended

January 31, 2019

(in thousands)

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Stock-Based Compensation

Stock‑based compensation expense related to stock options is recorded within the consolidated statements of operations and comprehensive loss as follows:

Year Ended December 31, 2021 Year Ended December 31, 2020

Research and development

1 unchanged sentence

General and administrative

1,017 464 4,847

Total stock-based compensation

2 unchanged sentences

Fixed asset purchase commitments

At December 31, 2020 and December 31, 2019, the Company had no capital commitments.

At December 31, 2021 and 2020, the Company had no capital commitments.

Other commitments

The Company enters into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes.

These contracts generally provide for termination upon notice, and therefore are cancellable contracts and are not required to be disclosed.

Most contracts provide for termination upon notice, and therefore are cancellable contracts.

As of December 31, 2021, total contractual commitments are estimated to be approximately $ 17,046 and the majority of these commitments are due within one year .

Indemnifications

4 unchanged sentences

Accordingly, the Company has not recognized any liabilities relating to these obligations as of December 31, 2021.

Legal Proceedings

The Company is not currently subject to any material legal proceedings.

Related Party Transactions

On March 24, 2021, Mr.

Duggan entered into a Note Purchase Agreement (the “Purchase Agreement”) pursuant to which he has loaned the Company $ 55.0 million in exchange for the issuance by the Company of an unsecured promissory note (the “Note”) in the amount of $ 55.0 million.

The Note accrues interest at a rate per annum equal to 150 % of the applicable 10 Year US Treasury rate, as adjusted monthly.

The rate is initially estimated to be approximately 2.4 %.

The Company may prepay any portion of the Note at its option without penalty.

The Note will mature and become due upon the earlier of (i) the consummation of a registered public offering with net proceeds of no less than $ 55.0 million, or (ii) 13 months from the date of issuance of the Note.

It is anticipated that this Note will be repaid in connection with the consummation of the rights offering described below.

In addition, the Purchase Agreement provides Mr.

Duggan a pro rata participation right in a subsequent Company equity financing transaction on terms at least equivalent to such terms as are agreed with any other third party investors.

In any such transaction, Mr.

Duggan would be permitted to apply the principal of the Note (to the extent the Note remains outstanding) to the purchase price of any such equity investment.

On November 6, 2020, the Company completed a private placement with Mr.

Duggan who subscribed for an aggregate of 14,071,856 shares of common stock, par value $ 0.01 per share at a price of $ 3.34 per common share of stock.

On November 6, 2020, the Company completed a private placement with the Mahkam Zanganeh Revocable Trust which subscribed for an aggregate of 149,701 shares of common stock, par value $ 0.01 per share at a price of $ 3.34 per common share of stock.

Dr Zanganeh was appointed to the Board of Directors on November 11, 2020 and as Chief Operating Officer on November 22, 2020.

As trustee of the Mahkam Zanganeh Revocable Trust, Dr.

Zanganeh may be deemed to beneficially own the securities of the Company held by the Mahkam Zanganeh Revocable Trust.

On December 24, 2019, the Company completed a private placement with Mr.

Duggan, who subscribed for an aggregate of 33,231,410 shares of common stock, par value $ 0.01 per share, and warrants to purchase an aggregate of 4,984,711 shares of common stock at a subscription price of $ 1.43 for a Subscription Share plus a Subscription Warrant, pursuant to a securities purchase agreement he entered into with the Company.

The exercise price of the Subscription Warrants is $ 1.58 per share.

The Subscription Warrants are exercisable any time in the period commencing on June 24, 2020, and ending on December 24, 2029.

On December 6, 2019, the Company entered into a deed of termination of the relationship agreement with Mr.

3 unchanged sentences

Duggan’s influence over the Company’s corporate actions and activities and the outcome of general matters pertaining to the Company.

The deed of termination became effective on February 24, 2020, upon the cancellation of the admission of the ordinary shares on AIM.

On December 24, 2019, the Company completed a private placement with Mr.

Glyn Edwards, the former Chief Executive Officer, who subscribed for an aggregate of 90,495 shares of common stock, par value $ 0.01 per share, and warrants to purchase an aggregate of 13,574 shares of common stock at a subscription price of $ 1.43 for a Subscription Share plus a Subscription Warrant, pursuant to a securities purchase agreement he entered into with the Company.

The exercise price of the Subscription Warrants is $ 1.58 per share.

The Subscription Warrants are exercisable any time in the period commencing on June 24, 2020, and ending on December 24, 2029.

In 2020, the Company had in place a consultancy agreement with Maky Zanganeh and Associates, Inc.

(“MZA”) to provide support for clinical operation activities related to the ongoing global Phase 3 clinical trials of ridinilazole for the treatment of CDI, regulatory activities pertaining to a potential new drug application should the Phase 3 trials be successful and strategic planning support more generally for the ridinilazole program.

The deed of termination became effective on February 24, 2020, upon the cancellation of the admission of the ordinary shares on the Alternative Investment Market, a sub-market of the London Stock Exchanges.

December 24, 2019 Private Placement

On December 24, 2019, the Company completed a private placement of its common stock and received aggregate gross proceeds of $ 50,000 from the issuance and sale of 35,075,690 shares of common stock at a price of $ 1.43 per share, of which 33,231,410 shares of common stock were subscribed by Mr.

Also, as part of the private placement,

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

participating investors were granted warrants with the right to subscribe for 5,261,350 shares of common stock at an exercise price of $ 1.58 , of which 4,984,711 were granted to Mr.

Duggan at an exercise price of $ 1.43 per share for a subscription share plus a subscription warrant, pursuant to a securities purchase agreement he entered into with the Company.

In conjunction with the December 24, 2019 private placement, 90,495 shares of common stock were subscribed by Mr.

Glyn Edwards, the Company's former Chief Executive Officer.

Also as part of this private placement, Mr.

Glyn Edwards was granted warrants with the right to subscribe for 13,574 shares of common stock at an exercise price of $ 1.43 per share for a subscription share plus a subscription warrant, pursuant to a securities purchase agreement he entered into with the Company.

November 6, 2020 Private Placement

On November 6, 2020 the Company completed a private placement of its common stock and received gross proceeds of $ 50,000 from the issuance and sale of 14,970,060 shares of common stock at a price of $ 3.34 per share, of which 14,071,856 shares of common stock were subscribed by Mr.

In conjunction with the November 6, 2020 private placement, 149,701 shares of common stock were subscribed by the Mahkam Zanganeh Revocable Trust.

Maky Zanganeh was appointed to the Board of Directors on November 11, 2020 and became the Company's Chief Operations Officer on November 22, 2020.

As trustee of the Mahkam Zanganeh Revocable Trust, Dr.

Maky Zanganeh is deemed to beneficially own the securities of the Company held by the Mahkam Zanganeh Revocable Trust.

Consultancy Agreements

In 2020, the Company had in place a consultancy agreement with Dr.

Maky Zanganeh and Associates, Inc.

(“MZA”) to provide support for clinical operation activities related to the global Phase III clinical program.

Maky Zanganeh is the sole owner of MZA, and Dr.

Stracker, who served for a period during fiscal year 2020 as a director of the Company and as the Company’s Interim Chief Operating Officer, was at the time the General Counsel and Senior Vice President for Corporate Development at MZA.

Elaine Stracker, who served for a period during fiscal year 2020 as a director of the Company and as the Company’s Interim Chief Operations Officer, was at the time the General Counsel and Senior Vice President for Corporate Development at MZA.

The fees for such services under the consultancy agreement with MZA were $ 75 per month.

3 unchanged sentences

The warrants granted to MZA were subsequently assigned to Dr.

Zanganeh and Dr.

Stracker have vested warrants to purchase 489,815 and 69,973 shares of common stock, respectively, which can be exercised through June 30, 2025.

Subsequent Events

Maky Zanganeh and Dr.

Elaine Stracker.

Maky Zanganeh and Dr.

Elaine Stracker have vested warrants to purchase 489,815 and 69,972 shares of common stock, respectively, which can be exercised through June 30, 2025.

March 24, 2021 Note Purchase Agreement

On March 24, 2021, Mr.

The Note accrues interest at a rate per annum equal to 150 % of the applicable 10 Year US Treasury rate, as adjusted monthly.

Duggan, entered into a Note Purchase Agreement (the “Initial Purchase Agreement”) pursuant to which he has loaned the Company $ 55,000 in exchange for the issuance by the Company of an unsecured promissory note (the “Initial Note”) in the amount of $ 55,000 .

The Initial Note was to accrue interest at a rate per annum equal to 150 % of the applicable 10 Year U.S.

Treasury rate, as adjusted monthly.

The rate is initially estimated to be approximately 2.4 %.

The Company may prepay any portion of the Note at its option without penalty.

It is anticipated that this Note will be repaid in connection with the consummation of the rights offering.

In addition, the Purchase Agreement provides Mr.

Duggan a pro rata participation right in a subsequent Company equity financing transaction on terms at least equivalent to such terms as are agreed with any other third party investors.

In any such transaction, Mr.

Duggan would be permitted to apply the principal of the Note (to the extent the Note remains outstanding) to the purchase price of any such equity investment.

On March 25, 2021, the Company’s Board of Directors approved a rights offering available to all holders of record of the Company’s common stock, par value $ 0.01 (the "Common Stock"), as of the close of business on April 9, 2021.

The Company intends to distribute to all holders of Common Stock as of the record date non-transferable subscription rights to purchase shares of Common Stock at a price per share equal to the lesser of (i) $ 5.24 per share, the closing price of the Common Stock on March 24, 2021, or (ii) the volume weighted-average price of the Common Stock for the ten consecutive trading days through and including the expiration date of the offering, currently contemplated to be May 4, 2021.

Assuming that the rights offering is fully subscribed, the Company will receive gross proceeds of up to $ 75.0 million, less expenses related to the rights offering.

The rights offering will include an over-subscription right to permit each rights holder that exercises its basic subscription rights in full to purchase additional shares of Common Stock that remain unsubscribed at the expiration of the offering.

The availability of the over-subscription right will be subject to certain terms and conditions to be set forth in the offering documents.

Duggan, the Executive Chairman and Chief Executive Officer and principal stockholder, has indicated that he intends to participate in the rights offering and subscribe for at least the full amount of his basic subscription rights, but has not made any formal binding commitment to do so.

On March 26, 2021, Summit Therapeutics Sub Inc.

entered into a Sublease with MZA for premises consisting of 4,500 feet of space at 2882 Sand Hill Road, Menlo Park, CA (the “Sublease”).

The Sublease runs until September 2022, with monthly rent payments to MZA of $ 57,960 in the first six months and $ 59,670 for the remainder of the term of the Sublease.

The terms of the Initial Note were that it would mature and become due upon the earlier of (i) the consummation of a registered public offering with net proceeds of no less than $ 55,000 , or (ii) 13 months from the date of issuance of the Initial Note.

On April 20, 2021, the Company determined, with Mr.

Duggan’s agreement, to rescind both the Initial Purchase Agreement and the Initial Note issued thereunder, and repaid the principal amount of the Initial Note in full, without interest or penalty, as such for the year ended December 31, 2021, the Company recognized imputed interest of $ 103 within additional paid in capital.

For the year ended December 31, 2021, debt issuance costs recognized related to the Initial Note were immaterial.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

March 26, 2021 Sublease Agreement with Dr.

Maky Zanganeh and Associates, Inc.

On March 26, 2021, the Company entered into a sublease with Dr.

Maky Zanganeh and Associates, Inc.

("MZA") consisting of 4,500 square feet of office space at 2882 Sand Hill Road, Menlo Park, CA (the “Sublease”).

Maky Zanganeh is the sole owner of MZA.

The sublease runs until September 2022.

The rent payable under the terms of the sublease is equivalent to the proportionate share of the rent payable by MZA to the third-party landlord, based on the square footage of office space sublet by the Company, and no mark-up has been applied.

During the year ended December 31, 2021, payments of $ 556 , were made pursuant to the sublease.

April 20, 2021 Note Purchase Agreement

On April 20, 2021, subsequent to the repayment of the Initial Note, Mr.

Duggan entered into a second Note Purchase Agreement (the “Second Purchase Agreement”) pursuant to which he loaned the Company $ 55,000 in exchange for the issuance by the Company of an unsecured promissory note (the “Second Note”) in the amount of $ 55,000 .

The Second Note accrued interest at a rate per annum equal to 150 % of the applicable 10 Year US Treasury rate, as adjusted monthly (initially estimated to be approximately 2.4 %).

The Company was permitted to prepay any portion of the second note at its option without penalty.

May 12, 2021 Rights Offering

On May 12, 2021, the Company closed its rights offering, which was fully subscribed.

Aggregate gross proceeds from the rights offering of $ 75,000 from the sale of 14,312,976 shares of the Company's common stock, of which 11,365,921 shares were purchased by Mr.

Duggan and 389,977 shares were purchased by Dr.

Maky Zanganeh, at price of $ 5.24 per share.

In connection with the closing of the rights offering, the Second Note, issued by the Company in favor of Mr.

Duggan, matured and became due and was repaid using a portion of the proceeds from the rights offering.

Subsequent Event

On March 10, 2022, Mr.

The 2022 Note is to accrue interest at a rate per annum equal to the prime rate as reported in the Wall Street Journal , which is 3.25 % as of the effective date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures