What changed in this filing

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Item 9A. Controls and Procedures

2023-03-09 compared with 2022-03-17 · 549 added, 403 removed, 941 unchanged (50% of the section changed)

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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, 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.

Based upon our evaluation of our disclosure controls and procedures as o f December 31, 2022, our Chief Executive Officer and Co-Chief Executive Officer (our Principal Executive Officers), and our Chief Financial Officer (our 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 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.

Our internal control over financial reporting is a process designed, under the supervision of the Chief Executive Officer and Co-Chief Executive Officer (our Principal Executive Officers), and our 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 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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The Compensation Committee of the Company’s Board of Directors reviewed and approved employee 2022 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.

A discretionary cash bonus of $202,500 and an extraordinary bonus of $250,000 was paid to Dr.

Zanganeh, the Company’s co-Chief Executive Officer, President and member of the Board , on January 10, 2023.

A discretionary cash bonus of $131,918 and an extraordinary bonus of $250,000 was paid to Ankur Dhingra, the Company’s Chief Financial Officer on January 10, 2023.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2022 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

The information required by this Item is incorporated herein by reference to the information that will be included in our proxy statement related to the 2023 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence.

Principal Accounting Fees and Services

Exhibits, Financial Statement Schedules

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

3.3 Amendment to Restated Certificate of Incorporation of Summit Therapeutics Inc., as filed with the Delaware Secretary of State on July 27, 2022 (incorporated by reference to Exhibit 3.

1 of Form 8-K filed by the Company on July 2 9 , 2022, File No.

3.4 Amendment No.

2 to Restated Certificate of Incorp oration , dated Januar y 19, 2023 ( incorporated by reference to Exhibit 5.1 of Form 8- K filed by the Company on January 20, 2023, File No.

4.1 Registration Rights Agreement, dated January 9, 2019, by and among Summit Therapeutics plc and Robert W.

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

10.40 Note Purchase Agreement, dated December 6, 2022, by and among Summit Therapeutics Inc., Robert W.

Duggan, and Dr.

Mahkam Zanganeh (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 December 6 , 2022)

10.41† Collaboration and License Agreement ,dated December 5, 2022, by and between Akeso, Inc.

and its affiliates and Summit Therapeutics Sub Inc.

(incorporated by reference to Exhibit 10.1 to the Company’s Form S-3 (File No.

333-268932) filed with the Securities and Exchange Commission on December 21, 2022)

10.42 Amendment No.

1 to Collaboration and License Agreement Amendment, dated January 16, 2023, by and among Summit Therapeutics Inc.

and Akeso, Inc.

(incorporated by reference to Exhibit 10.1 of Form 8-K filed by the Company on January 20, 2023, File No.

10.43 Common Stock Issuance Agreement, dated January 17, 2023, by and among Summit Therapeutics Inc.

and Akeso, Inc.

(incorporated by reference to Exhibit 10.2 of Form 8-K filed by the Company on January 20, 2023, File No.

10.44 Promissory Notes, dated January 19, 2023, by and among Summit Therapeutics Inc.

and Robert W.

Duggan (incorporated by reference to Exhibit 10.3 of Form 8-K filed by the Company on January 20, 2023, File No.

10.45#* Amended and Restated 2020 Stock Incentive Plan, dated July 27, 2022

10.46†* First Amendment to Sublease Agreement, dated July 25, 2022, by and among Summit Therapeutics Inc.

and Maky Zanganeh and Associates, Inc.

10.47†* Second Amendment to Sublease Agreement, dated July 29, 2022, by and among Summit Therapeutics Inc.

and Maky Zanganeh and Associates, Inc.

10.48#* Contract of Employment, dated April 15 , 2022, by and between Summit Therapeutics Inc.

and Ankur Dhingra

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.

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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 C o- 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

31.3* 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 pursuant to 18 U.S.C.

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* Filed herewith.

† Confidential treatment has been granted as to certain portions of the exhibit.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.

† Portions of this exhibit have been omitted in compliance with Regulation S-K Item 601(b)(10)(iv) because the Registrant has determined that the information is not material and is the type that the Registrant treats as private or confidential.

+ Certain portions of this exhibit have been omitted because they are not material and would likely cause competitive harm to the registrant if disclosed.

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Chief Executive Officer and Executive Chairman;

Principal Executive Officer and Principal Financial Officer

Principal Executive Officer

/s/ Mahkam Zanganeh

Mahkam Zanganeh

Co-Chief Executive Officer, President and member of the Board;

Principal Executive Officer

/s/ Ankur Dhingra

Ankur Dhingra

Chief Financial Officer;

Principal Financial Officer

March 9, 2023

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/s/ Robert W.

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

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

March 9, 2023

/s/ Mahkam Zanganeh Co-Chief Executive Officer, President and member of the Board

( Principal Executive Officer )

March 9, 2023

Mahkam Zanganeh

/s/ Ankur Dhingra Chief Financial Officer

(Principal Financial Officer)

March 9, 2023

Ankur Dhingra

/s/ Robert F.

Booth Director March 9, 2023

/s/ Alessandra Cesano Director March 9, 2023

Alessandra Cesano

/s/ Kenneth Clark Director March 9, 2023

Kenneth Clark

/s/ Urte Gayko Director March 17, 2022

/s/ Ujwala Mahatme Director March 9, 2023

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/s/ Manmeet Soni Director March 9, 2023

/s/ Yu Xia Director March 9, 2023

Summit Therapeutics Inc.

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

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

Consolidated Balance Sheets

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Opinion on the Financial Statements

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.

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

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for the years 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years 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 audit.

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

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

We conducted our audits 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 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.

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.

Accordingly, we express no such opinion.

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.

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.

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

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.

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.

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.

As discussed in Note 17 to the consolidated financial statements, the Company has a note payable with a principal amount of $100 million maturing in September 2024.

Management’s evaluation of the events and conditions related to future funding are described in Note 3.

Critical Audit Matters

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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.

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.

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

Summit Therapeutics Inc.

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Current assets:

Cash $ 71,791 $ 66,417

Cash and cash equivalents $ 348,607 $ 71,791

Restricted cash 300,000 —

Accounts receivable 349 1,464

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Other current liabilities 662 897

Promissory note payable to related parties 19,770 —

Total current liabilities 38,782 25,623

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Lease liabilities, net of current portion 2,763 1,691

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

Other non-current liabilities 1,429 2,776

Promissory notes payable to related parties 494,540 —

Total liabilities 537,514 30,090

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Stockholders' equity:

Preferred stock, $ 0.01 par value, 20,000,000 shares authorized;

none issued and outstanding at December 31, 2022 and 2021, respectively

Common stock, $ 0.01 par value:

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Operating loss ( 72,089 ) ( 86,186 )

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

Other expense, net ( 6,693 ) ( 2,416 )

Loss before income tax ( 78,782 ) ( 88,602 )

Income tax benefit — 213

Net loss $ ( 78,782 ) $ ( 88,602 )

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Basic and diluted 193,336,063 131,714,225

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments 304 1,597

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Balance at December 31, 2020

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

82,575,064 $ 826 $ 293,367 $ ( 3,794 ) $ ( 210,946 ) $ 79,453

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

2021 Rights Offering of common stock, net of offering costs of $ 159

14,312,976 143 74,698 — — 74,841

Issuance on common stock from exercise of share 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

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Balance at December 31, 2021

98,039,540 $ 980 $ 384,049 $ ( 2,197 ) $ ( 299,548 ) $ 83,284

2022 Rights Offering of common stock, net of offering costs of $ 111

103,092,783 1,031 98,858 — — 99,889

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

Issuance of common stock in lieu of interest to related parties 9,720,291 97 7,497 — — 7,594

Issuance of common stock under stock purchase plans and exercise of stock options 238,811 2 397 — — 399

Stock-based compensation — — 11,948 — — 11,948

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

Imputed interest expense on promissory notes payable to related parties — — 2,018 — — 2,018

Foreign currency translation adjustment — — — 304 — 304

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Balance at December 31, 2022

211,091,425 $ 2,110 $ 504,767 $ ( 1,893 ) $ ( 378,330 ) $ 126,654

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

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(in thousands)

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

December 31, 2022 December 31, 2021

Cash flows used in operating activities:

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Gain on remeasurement of liabilities ( 1,265 ) —

Gain on recognition of contingent consideration payable — ( 102 )

Non-cash interest expense 4,303 196

Unrealized foreign exchange loss (gain) 326 ( 278 )

Unrealized foreign exchange loss 2,614 326

Amortization of operating right-of-use assets 1,251 1,108

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Accounts payable ( 4,132 ) ( 1,711 )

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

Accrued liabilities 4,782 5,075

Accrued compensation 1,609 3,154

Operating lease liabilities ( 1,099 ) ( 1,068 )

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Net cash provided by financing activities 620,244 77,916

Effect of exchange rates on cash 351 556

Increase in cash 5,374 2,575

Effect of exchange rates on cash and restricted cash ( 1,222 ) 351

Increase in cash, cash equivalents and restricted cash 576,816 5,374

Cash at beginning of period 71,791 66,417

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

Cash, cash equivalents and restricted cash at end of period $ 648,607 $ 71,791

Supplemental Disclosure of Cash Flow Information

Cash paid for interest on related party promissory note $ 434 $ 85

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

Debt issuance costs in accrued expenses $ 31 $ —

Transaction costs included in accrued expenses $ — $ 41

Deferred transaction costs included in other non-current assets $ 425 $ —

Leased assets obtained in exchange for operating lease liabilities $ 2,860 $ 3,389

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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.

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.

law pursuant to which all Summit Therapeutics plc outstanding ordinary shares were exchanged on a five-for-one basis for newly issued shares of Summit common stock and Summit became the holding company of Summit Therapeutics plc (the predecessor registrant and former holding company) and its subsidiaries (which is referred to as the "Redomiciliation Transaction").

Concurrently, Summit Therapeutics plc was converted into a private limited company under the laws of England and Wales and renamed Summit Therapeutics Limited.

In addition, the warrants and stock options to purchase shares of Summit Therapeutics plc were canceled and replacement warrants and stock options to purchase common stock in Summit Therapeutics Inc.

The scheme of arrangement was accounted for as an exchange of equity interests among entities under common control.

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.

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.

The Company's pipeline of product candidates is designed with the goal to become the patient-friendly, new-era standard-of-care medicines.

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.

On September 28, 2022, the Company determined that it would seek partners or a divestiture of ridinilazole, the Company's lead product candidate for treating patients suffering from Clostridioides difficile infection, also known as C.

difficile infection, or CDI, as the path forward for the clinical development of the asset.

As a result of this determination, the Company discontinued its only active study for ridinilazole, a pediatric clinical trial evaluating ridinilazole for treating adolescent patients with CDI.

The Company is currently involved in activities related to closeout of ridinilazole clinical trials.

On December 5, 2022, the Company entered into a Collaboration and License Agreement (the “License Agreement”) with Akeso, Inc.

and its affiliates (“Akeso”) pursuant to which we are partnering with Akeso to in-license its breakthrough bispecific antibody, ivonescimab.

Ivonescimab, known as AK112 in China and Australia, and also as SMT112 in the United States, Canada, Europe, and Japan, is a novel, potential first-in-class bispecific antibody intending to combine the power of immunotherapy via a blockade of PD-1 with the anti-angiogenesis benefits of an anti-VEGF into a single molecule.

Ivonescimab was engineered to bring two well established oncology targeted mechanisms together.

Through the License Agreement, the Company obtained the rights to develop and commercialize SMT112 in the United States, Canada, Europe, and Japan.

In exchange for these rights, an upfront payment of $ 500,000 is payable to Akeso, $ 300,000 of which was payable within the later of 15 days after execution of the License Agreement or upon the earliest date on which the parties have actual knowledge that all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any comparable extension periods with respect to the transactions contemplated by the License Agreement have expired or been terminated (the “Antitrust Clearance Date”) and $ 200,000 of which is payable within the later of (i) 90 days after execution of the License Agreement or (ii) the Antitrust Clearance Date.

In connection with the first payment, up to 16 million shares of Company common stock may be issued in lieu of cash at Akeso’s election (the “Share Transfer”), with the value of such shares based on the ten ( 10 ) day volume-weighted average price for the five -trading day period prior to and the five -trading day period after the execution of the License Agreement.

The total of the upfront payment and potential milestone payments is $ 5,000,000 , as Akeso will be eligible to receive regulatory milestones of up to $ 1,050,000 and commercial milestones of up to $ 3,450,000 .

In addition, Akeso will be eligible to receive low double-digit royalties on net sales.

The License Agreement closed on January 17, 2023, and both Akeso and Summit entered into the Common Stock Issuance Agreement (“Issuance Agreement”).

Pursuant to the License Agreement and Issuance Agreement, Akeso elected to receive 10 million shares of Company common stock in lieu of cash and was paid $ 274,900 dollars in cash as the initial upfront payment.

The remaining $ 200,000 amount of the upfront payment was paid on March 6, 2023.

On December 6, 2022, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement"), with Mr.

Duggan and Dr.

Zanganeh, pursuant to which the Company agreed to sell to each of Mr.

Duggan and Dr.

Zanganeh unsecured promissory notes in the aggregate amount of $ 520,000 .

For further details see Note 17.

On January 6, 2023, the Company held a Special Meeting of Stockholders (the “Shareholder Special Meeting”), whereby the following matters were submitted to a vote of the Company’s stockholders:

(i) an amendment to the Company’s Restated Certificate of Incorporation, dated September 18, 2020, as amended on July 27, 2022 (the “Restated Certificate”), to increase the number of authorized shares of common stock by 650,000,000 (from 350,000,000 to 1,000,000,000 );

and (ii) an amendment to the Restated Certificate to effect, as needed, a reverse stock split of all of the outstanding shares of the Company’s common stock at a ratio in the range of 1-for-5 to 1-for-10.

Summit Therapeutics Inc.

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(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.

Each of the matters submitted to a vote of the Company’s stockholders at the Special Meeting was approved by the requisite vote of the Company’s stockholders in accordance with the recommendation of the Company’s Board of Directors.

The final decision of whether to proceed with the amendments may be determined by the Company's Board of Directors, in its discretion, at any time prior to January 6, 2024.

On January 19, 2023, the Company filed Amendment No.

2 to the Restated Certificate of Incorporation (the “Amendment No.

2”) with the Secretary of State of the State of Delaware to increase the number of authorized shares of its common stock by 650,000,000 (from 350,000,000 to 1,000,000,000 ), which became effective on such date.

On February 7, 2023, the Company commenced its previously announced rights offering ("Rights Offering").

On March 1, 2023, the Company closed the Rights Offering, which was fully subscribed.

The Company received aggregate gross proceeds from the Rights Offering of $ 500,000 from the sale of 476,190,471 shares of our common stock at a price per share of $ 1.05 .

Issuance costs associated with the Rights Offering were approximately $ 500 .

In connection with the closing of the Rights Offering, $ 400,000 of the unsecured promissory notes, issued by us to Mr.

Duggan, matured and became due and the Company repaid the principal amount and all outstanding accrued interest thereunder using a portion of the proceeds from this Rights Offering.

On February 15, 2023, $ 20,000 of the unsecured promissory notes, issued by us to Dr.

Zanganeh, matured and the Company repaid the outstanding principal balance.

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.

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Securities and Exchange Commission.

Any reference in these notes to applicable guidance is meant to refer to authoritative U.S.

GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

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.

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During the year ended December 31, 2022, the Company incurred a net loss of $ 78,782 and cash flows used in operating activities was $ 41,582 .

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 .

As of December 31, 2022, the Company had an accumulated deficit of $ 378,330 , cash and cash equivalents of $ 348,607 , restricted cash of $ 300,000 , research and development tax credit receivable of $ 5,766 and accounts receivable of $ 349 .

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

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

Based on the Company's existing cash, cash equivalents and U.K.

research and development tax credits, after considering the payments made to Akeso in January and March 2023 totaling $ 474,900 , the net proceeds of $ 499,500 from the Rights Offering that closed on March 1, 2023, and repayments of the promissory notes payable to related parties in February and March 2023

Summit Therapeutics Inc.

1 unchanged sentence

(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.

totaling $ 420,000 , the Company has the ability to fund its operating costs and working capital needs for its planned clinical trials for ivonescimab for a period of at least twelve months from the date of issuance of these consolidated financial statements.

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.

The Company continues to evaluate options to further finance its operating cash needs for its product candidates 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 marketing, distribution or licensing arrangements.

While the Company believes that funds would be available in this manner before 2024, 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 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 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.

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Summary of Significant Accounting Policies

The significant accounting policies adopted by the Company in the preparation of these financial statements are set out below.

The significant accounting policies adopted by the Company in the preparation of these consolidated financial statements are set out below.

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

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Securities and Exchange Commission.

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

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

and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Intercompany balances and transactions are eliminated in consolidation.

Foreign Currency Translation

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

dollar are translated into U.S.

The financial statements of the Company’s subsidiaries with functional currencies other than the United States ("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.

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

The Company recorded realized and unrealized foreign currency transaction losses of $ 4,109 and $ 2,135 for the years ended December 31, 2022 and 2021, respectively, which is included in other expense, net in the statements of operations and comprehensive loss.

Revenue Recognition

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

The Company accounts for revenue using ASC 606.

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

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Each of these payments may result in license, collaboration, or other revenue, except revenue from royalties on net sales of licensed products, which would be classified as royalty revenue.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its out-licensing agreements, the following steps are performed:

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

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;

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

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

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There is considerable judgment involved in determining whether it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price of the arrangement.

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.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint

Summit Therapeutics Inc.

1 unchanged sentence

(in thousands, except share and per share data)

and, if necessary, adjusts its estimate of the overall transaction price of the arrangement.

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.

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.

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If the government agency approves the project proposed by the Company, the government agency funds the project upon receipt of the support for the costs incurred up to the contract limit.

Income recognized upon incurring qualifying expenses in advance of billing is recorded as accrued income, a component of other current assets, in the consolidated balance sheet.

Income recognized upon incurring qualifying expenses in advance of billing is recorded as unbilled receivable, a component of other current assets, in the consolidated balance sheet.

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 as the underlying expenditure is incurred and to the extent the conditions of the grant are met.

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, classified as other operating 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.

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The Company has qualified under the more favorable SME regime for the year ended December 31, 2021 and expects to qualify under the SME regime for the year ending December 31, 2022.

Net Income Per Share

Net Loss 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.

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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.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Business Combinations

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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.

The valuation approach is 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.

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

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.

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.

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 process of evaluating the potential impairment of goodwill requires significant judgment.

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.

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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

Intangible 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.

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

The Company performed its annual impairment assessment of goodwill in the fourth quarter of 2022 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.

Summit Therapeutics Inc.

1 unchanged sentence

(in thousands, except share and per share data)

value of the underlying asset.

Intangible Assets

Intangible assets are estimated by management based on the fair value of assets acquired.

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

Intangible assets are amortized from one to 18 years on a straight-line basis which represents the estimated periods of benefit and the expected pattern of consumption.

Our intangible assets are recorded at fair value at the time of their acquisition, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives or over the period of the relevant agreement for an option over non-financial assets.

Intangible assets are stated in our consolidated balance sheets net of accumulated amortization and impairments, if applicable.

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 or asset group may not be fully recoverable.

If events and circumstances indicate that the carrying amount may not fully be recoverable, the carrying values of the asset or asset group 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 value of the underlying asset or asset group.

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.

As of December 31, 2022 and 2021, intangible assets were $ 0 and $ 10,399 , respectively.

The carrying value of $ 10,399 as of December 31, 2021 related to the Discuva Platform has been impaired in full during the year end December 31, 2022.

Property and Equipment

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Depreciation is calculated based on cost, less residual value, in equal annual installments over the estimated useful lives of the assets.

The residual value, if not insignificant, is reassessed annually.

The residual value, if significant, is reassessed annually.

Leasehold improvements Over the shorter of the asset's useful life or the remaining lease term

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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.

Under ASC 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.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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

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

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Research and Development Costs

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The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards.

Additionally, the Company uses a Monte Carlo simulation model to calculate the estimated fair value on the date of grant related to awards with market-based service conditions.

The fair value is recognized as expense, over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis for each separately vesting portion of the award when the only condition to vesting is continued service.

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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.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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

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

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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.

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.

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 Company classifies stock-based compensation expense in the consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified.

The Company is primarily subject to corporation taxes in the U.S.

and the U.K..

The calculation of the Company’s tax provision involves the application of both U.S.

tax law and requires judgment and estimates.

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

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

The Company accounts for uncertainty in income taxes by applying a two-step process to determine the amount of tax benefit to be recognized.

First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities.

If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed as the amount of benefit to recognize in the consolidated financial statements.

The amount of benefits that may be used is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties.

At December 31, 2022 and 2021, the Company had no uncertain tax positions.

Concentration of Credit Risk and of Significant Supplier

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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.

The credit risk with respect to customers and funding bodies is limited as the Company has only a small number of these arrangements.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company relies, and expects to continue to rely, on a number of vendors to conduct its clinical trials and preclinical studies, manufacture drug product and supply clinical trial and preclinical study materials for its development programs.

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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.

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

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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.

Cash and Cash Equivalents

We consider only those investments that are highly liquid, readily convertible to cash and that mature within 90 days or less from date of purchase to be cash equivalents, and the related investment income is recognized in net loss.

As of December 31, 2022 , cash equivalents were comprised of a money market funds and U.S.

treasury securities with maturities less than 90 days from the date of purchase.

We did not have cash equivalents as of December 31, 2021.

Restricted Cash

Restricted cash represents amounts which are legally restricted to withdrawal or usage and is presented in the Consolidated Balance Sheet as restricted cash.

On December 15, 2022, the Company transferred $ 300,000 into an escrow fund reserved for the Company's initial upfront payment to Akeso in connection with the License Agreement, as described further in Note 23.

Following the Antitrust Clearance Date, on January 17, 2023, the License Agreement closed and Akeso was issued 10 million shares of Company common stock pursuant to the Common Stock Issuance Agreement and was paid $ 274,900 in cash as initial upfront payment.

The remaining amounts in escrow were returned to the Company's operating cash accounts.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Assumed Contingent Liabilities

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

Accretion of the discount factor and gains or losses upon remeasurement are 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.

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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.

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 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.

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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:

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.

GAAP requires that the acquirer measure such assets and liabilities at

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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.

1 unchanged sentence

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 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.

1 unchanged sentence

In December 2019, the FASB issued ASU No.

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.

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.

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Segment Reporting

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 Company's chief operating decision makers (the "CODM function"), which are the Company's Co-CEOs, Mr.

Duggan and Dr.

Zanganeh, 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.

The Company's single operating segment covers the Company’s research and development activities, primarily comprising of oncology product research activities (including ivonescimab), antibiotic pipeline research activities, and CDI program 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:

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$ 5,081 $ 3,484

(1) The increase of long-lived assets in the United States is primarily attributed to additional right-of-use assets recorded related to the Company's first and second amendments to its sublease agreement during the period for its Menlo Park, California, U.S.

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

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The following table summarizes revenue by category:

Year Ended December 31, 2022 Year Ended December 31, 2021

Revenue by category:

Licensing agreements $ 705 $ 1,809

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.

Revenue recognized 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, 2022 Year Ended December 31, 2021

Revenue by geography:

United States $ — $ —

Latin America $ 705 $ 1,809

$ 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:

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

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

$ 7,939 $ 8,939

Additions 1,397 5,443

Amount of deferred revenue and other income recognized in the statement of operations ( 8,790 ) ( 6,438 )

Foreign currency adjustment ( 546 ) ( 5 )

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.

(1) Beginning deferred revenue and other income as of January 1, 2022 and 2021 included $ 7,939 of current and $ 0 of long-term deferred revenue and other income, and $ 8,370 of current and $ 569 of long-term deferred revenue and other income, respectively.

(2) Ending deferred revenue and other income as of December 31, 2022 and 2021 included $ 0 of current and $ 0 of long-term deferred revenue and other income, and $ 7,939 of current and $ 0 of long-term deferred revenue and other income, respectively.

As of January 1, 2022, deferred revenue and other income is compromised of $ 756 and $ 7,183 relating to Eurofarma and BARDA, respectively.

As of December 31, 2022, deferred revenue was $ 0 .

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

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

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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

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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.

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.

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

Revenue recognized during the years ended December 31, 2022 and 2021 related to the upfront payment and the first two enrollment milestones earned in accordance with the Company's revenue recognition policy.

The revenue was recognized ratably over the determined performance period to reflect the transfer of control to the customer occurring over the time period that the research and development services were 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, 2022 and 2021, the current contract liability relating to the Eurofarma contract was $ 0 and $ 756 , 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)

As of December 31, 2022, the Company has recognized $ 4,678 of cumulative income since inception.

Other Operating Income

11 unchanged sentences

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, 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.

This option work segment was never exercised by BARDA.

The contract ran through April 2022 and was extended through December 2022 as a no cost contract, solely to close out open activities.

As of December 31, 2022, based on translation of historical foreign currency amounts in the period of recognition, the Company has recognized $ 59,203 of cumulative income since contract inception.

As a result of the Company's decision, on September 28, 2022, to not pursue further internal clinical development of ridinilazole and seek partners or a divestiture related to ridinilazole as a path forward for the clinical development of the asset, the Company recorded expenses for the remaining clinical trial costs associated with the close out activities of ridinilazole and recognized the remainder of the deferred income that had been received from BARDA prior to the expenses being recognized during the third quarter of 2022.

Research and development credits

2 unchanged sentences

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").

Small and Medium Enterprise Program ("SME, Program") and the Research and

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Development Expenditure Credit Program ("RDEC Program").

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 income.

1 unchanged sentence

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 ("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.

Based on criteria established by His 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 research and development expenditure incurred in its UK entities will also continue to be eligible for the SME regime for future periods.

As of December 31, 2022 and 2021, the current research and development tax credit receivable was $ 5,766 and $ 15,695 , respectively.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

CARB-X (as defined below)

2 unchanged sentences

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

As of December 31, 2022, based on translation of historical foreign currency amounts in the period that the amounts were recognized, the Company has recognized $ 2,875 of cumulative income since contract inception.

During the quarter ended September 30, 2022, CARB-X announced changes to its funding arrangements and terms and conditions.

As a result, the current arrangement concluded as of June 30, 2022, however the Company has the ability to recognize reimbursements for any milestone payments related to work incurred subsequent to this date in accordance with this agreement.

Other Expense, net

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

Year Ended December 31, 2022 Year Ended December 31, 2021

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

Remeasurement of liabilities (1)

Interest income — 4

Interest expense ( 281 ) ( 255 )

$ ( 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).

Foreign currency loss $ ( 4,109 ) $ ( 2,135 )

Interest expense on promissory notes payable to related parties ( 4,401 ) ( 242 )

Investment income 1,513 —

Other income (expense), net 304 ( 39 )

Other Expense, net $ ( 6,693 ) $ ( 2,416 )

For the year ended December 31, 2022, other expense, net primarily consisted of unfavorable changes in foreign currency, loan interest expense incurred related to the $ 520,000 and $ 25,000 promissory notes, as described in Note 17, partially offset by investment income related to our money market funds and investments in highly liquid U.S.

treasury securities, which are classified as cash equivalents as of December 31, 2022.

For the year ended December 31, 2021, other expense, net primarily consisted of unfavorable changes in foreign currency and loan interest expense incurred related to the $ 55,000 promissory note, as described in Note 22.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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

3 unchanged sentences

Loss before income taxes $ ( 78,782 ) $ ( 88,602 )

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, 2021 Year Ended December 31, 2020

Current income tax benefit:

Federal United States $ — $ ( 215 )

State - United States — 2

Non-United States — —

Total — ( 213 )

Federal - United States — —

State - United States — —

Non-United States — —

Total deferred tax — —

Total income tax benefit $ — $ ( 213 )

The Company has not recognized a current or deferred provision for federal, state or non-United States income taxes in either of the years ending December 31, 2022 or December 31, 2021.

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

Year Ended December 31, 2022 Year Ended December 31, 2021

Deferred tax assets:

2 unchanged sentences

Stock-based compensation 3,879 2,560

Section 174 Research and Development Capitalization 3,553 —

Other 2,139 1,477

10 unchanged sentences

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

federal and state deferred tax 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, 2022 and 2021, respectively.

The Company reevaluates the positive and negative evidence at each

Summit Therapeutics Inc.

1 unchanged sentence

(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.

reporting period.

The Company’s valuation allowance increased during 2021 by $ 12,270 primarily due to the generation of net operating loss and stock-based compensation.

As of December 31, 2022 and 2021, 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.

Federal gross operating loss carryforwards of approximately $ 11,620 and $ 4,921 , 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 $ 7,278 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.

State gross loss carryforwards which expire through various dates through 2036 and as of December 31, 2022, the Company had an estimated U.S.

federal research and development tax credit carryforwards of $ 1,723 which may be available to offset future tax liabilities, and each begin to expire in 2041.

The Company also had approximately $ 199,091 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 ).

gross loss carryforwards available to use against future taxable profits on a year-by-year basis (a potential deferred tax asset of $ 49,773 ).

To the extent that U.K.

13 unchanged sentences

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.

The 2017 Tax Cuts and Jobs Act (“TCJA”) 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.

4 unchanged sentences

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

IRC Section 174 generally permitted taxpayers that incurred research expenses to deduct them in the current year.

For tax years beginning before January 1, 2022, taxpayers were able to make an election with respect to research and experimental (“R&E”) expenditures incurred in connection with a trade or business to either currently deduct or defer and amortize such expenditures.

The TCJA amended this provision to require that R&E expenditures be capitalized and amortized, but delayed the effective date of this amendment, which applies to tax years beginning January 1, 2022 or later.

As such, the changes to IRC Section 174

Summit Therapeutics Inc.

1 unchanged sentence

(in thousands, except share and per share data)

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

pursuant to the TCJA are currently applicable to the Company for the 2022 tax year.

R&E expenditures attributable to U.S.

based research must be amortized over a period of five years and R&E expenditures attributable to research conducted outside of the U.S.

must be amortized over a period of 15 years.

As such, the Company is capitalizing $ 14,830 R&E expenditures with a net adjustment of $ 13,347 to account for the capitalization and amortization of R&D expenses incurred in the U.S.

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

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.

3 unchanged sentences

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.

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 for the year ended December 31, 2021.

No changes to this rate have been made during 2022.

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

15 unchanged sentences

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.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Company does not have any uncertain tax positions as of December 31, 2022.

6 unchanged sentences

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.

As of December 31, 2022, and 2021, the Company has recorded no liability for unrecognized tax benefits, interest, or penalties related to federal, state or foreign income tax matters.

Loss per Share

8 unchanged sentences

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.

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.

Because the Rights Offering exercise price of $ 1.05 per share was less than the closing price of $ 1.82 per share on March 1, 2023, the expiration of the Rights Offering (further detailed in Note 23), the Company has retroactively adjusted earnings per share and weighted average number of shares outstanding for the bonus element for all periods presented.

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 19,476,359 13,797,556

2 unchanged sentences

25,526,971 19,820,738

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.

1 unchanged sentence

(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.

Goodwill and Intangible Assets

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

1 unchanged sentence

No impairment charge was recognized for the year ended December 31, 2022 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.

As of December 31, 2022 and 2021, goodwill was $ 1,798 and $ 2,009 , respectively.

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

6 unchanged sentences

Option over non-financial asset 816 ( 816 ) —

Other patents and licenses 148 ( 148 ) —

Other intangibles 133 ( 133 ) —

$ 17,864 $ ( 17,864 ) $ —

4 unchanged sentences

Option over non-financial asset 912 ( 912 ) —

921 ( 921 ) —

Other patents and licenses 150 ( 150 ) —

Other intangibles 148 ( 148 ) —

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

(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 $ 0 .

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.

In December 2017, we expanded our activities in the field of infectious diseases with the acquisition of Discuva Limited, a privately held United Kingdom-based company.

Through this acquisition, we obtained a bacterial genetics platform and a suite of software-based technologies (collectively termed our “Discuva Platform”), which facilitates the discovery and development of new mechanism antibiotics.

In conjunction with the significant change in the Company’s strategy and shift in focus to the therapeutic area of oncology, the Company determined that it will cease further investment in the Discuva Platform and evaluate further options for the use of the Discuva Platform.

Management have concluded that this indicated the carrying amount of the acquired Discuva Platform intangible asset may not be recoverable and hence performed an assessment using a probability-weighted approach to determine the undiscounted cash flows of the asset, which indicated that an impairment exists.

Based on the assessment to compare the fair value of the asset to its carrying amount, an impairment charge of $ 8.5 million was recognized during the year ended December 31, 2022, representing the aggregate carrying value of the intangible asset.

This impairment charge is presented as impairment of intangible assets in the consolidated statements of operations and comprehensive loss.

Summit Therapeutics Inc.

1 unchanged sentence

(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

Changes year over year in the gross amount of intangible assets are the result of foreign currency movements only.

Amortization expense was $ 914 and $ 1,017 for the years ended December 31, 2022 and 2021, respectively.

Changes year over year in the accumulated amount of amortization and impairment also include the effect of foreign currency movements.

Cash Equivalents and Fair Value Measurements

The following tables set forth the fair value of the Company's financial assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy utilized to determine such values:

Fair Value Measurements as of December 31, 2022 using:

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 60,783 $ — $ — $ 60,783

Government treasury bills $ — $ 225,730 $ — $ 225,730

Total financial assets $ 60,783 $ 225,730 $ — $ 286,513

The table above does not include cash at December 31, 2022 of $ 62,094 .

There were no cash equivalents held by the Company as of December 31, 2021.

Cash at December 31, 2021 was $ 71,791 .

The Company's financial instruments include cash and cash equivalents and restricted cash.

Cash consists of non-interest-bearing deposits denominated in the U.S.

dollar, British pound and Euro, while cash equivalents consists of interest-bearing money market fund deposits denominated in the U.S.

dollar and U.S.

treasury bills, and restricted cash consists of interest-bearing deposits denominated in the U.S.

The Company believes that the carrying amounts of prepaid expenses, other current assets, accounts payable, and accrued expenses approximates their fair values due to the short-term nature of those instruments.

The carrying value of the Company’s promissory notes approximates its fair value due to the recent issuance of the notes in December 2022 when compared to market interest rates (which represents a Level 2 measurement).

Property and Equipment

11 unchanged sentences

Included within accrued liabilities at December 31, 2022 and 2021 is $ 8,911 and $ 5,226 , respectively, relating to research and development expenditures.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

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.

3 unchanged sentences

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.

During the year ended December 31, 2022, the Company recorded $ 2,860 of additional right-of-use assets of which $ 2,755 related to the first and second amendments to its sublease agreement during the period for its Menlo Park, California, United States location and $ 105 which related to a remeasurement of the right of use asset and lease liability following a contractual rent review resulting in an increase in rent payments during the period for its Oxfordshire, United Kingdom location.

The carrying value of the right-of-use assets as of December 31, 2022 and 2021 is $ 4,175 and $ 2,790 , 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:

4 unchanged sentences

Total lease cost $ 1,552 $ 1,227

(1) Short-term lease costs relate to the Company's Cambridge, Massachusetts, United States office lease which the Company exited during fiscal year 2022.

The weighted average discount rate and the weighted average remaining lease term were 5.7 % and 3.4 years, respectively, as of December 31, 2022.

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 Company made cash payments related to lease liabilities of $ 1,092 and $ 1,041 for the years ending December 31, 2022 and 2021 respectively.

Future lease payments under non-cancelable leases as of December 31, 2022 are detailed as follows:

Year Ending December 31, Amount

Year Ending December 31,

Total lease payments 4,890

4 unchanged sentences

Non-current lease liabilities 2,763

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.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Promissory Notes Payable to Related Parties

Non-current and current debt consisted of the following:

Current notes Non-current notes

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Principal amounts $ 20,000 $ — $ 500,000 —

Debt discount ( 230 ) — ( 5,460 ) $ —

Total promissory notes payable to related parties $ 19,770 $ — $ 494,540 $ —

March 2022 Promissory Note

On March 10, 2022, Mr.

Duggan, entered into a Note Purchase Agreement (the “March 2022 Note”), pursuant to which he 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 March 2022 Note accrued interest at a rate per annum equal to the prime rate as reported in the Wall Street Journal .

The March 2022 Note, including all accrued interest, became 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 March 2022 Note.

Debt issuance costs associated with the March 2022 Note were immaterial and expensed as incurred.

The March 2022 Note of $ 25,000 , plus accrued interest of $ 434 has been repaid to Mr.

Duggan on August 10, 2022 in connection with the completion of the rights offering with aggregate gross proceeds of $ 100,000 .

The Company incurred interest expense of $ 1,296 for the year ended December 31, 2022, which included amortized imputed interest of $ 861 for the year ended December 31, 2022.

December 2022 Promissory Notes

On December 6, 2022, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement"), with Mr.

Duggan and Dr.

Zanganeh, pursuant to which the Company agreed to sell to each of Mr.

Duggan and Dr.

Zanganeh unsecured promissory notes in the aggregate amount of $ 520,000 .

Pursuant to the Note Purchase Agreement, the Company issued to Mr.

Duggan and Dr.

Zanganeh unsecured promissory notes in the amount of $ 400,000 (the "Duggan February Note") and $ 20,000 (the "Zanganeh Note"), respectively, which would mature and become due on February 15, 2023 and an unsecured promissory note to Mr.

Duggan in the amount of $ 100,000 (the “Duggan September Note” and together with the Duggan February Note and the Zanganeh Note, the “December 2022 Notes”), which will mature and become due on September 15, 2023.

The maturity dates of the December 2022 Notes could be extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.

In addition, if the Company shall consummate a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100 % of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.

On January 19, 2023, the Company provided notice to extend the term of the Duggan February Note and Duggan September Note to a maturity date of September 6, 2024.

Furthermore, on January 19, 2023, the Company and Mr.

Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $ 500,000 (the “Rights Offering”), or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) Duggan September Note following the completion of a capital raising transaction subsequent to the Rights Offering in an amount equal to the lesser of (i) the net proceeds of such capital raise or (ii) the full amount outstanding of the Duggan September Note.

Following the issuance of the two new Promissory Notes (the “Duggan Promissory Notes”), the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Duggan Promissory Notes (together with the Zanganeh Note, the "Notes").

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

The Notes accrue interest at an initial rate of 7.5 %.

All interest on the Notes shall be paid on the date of signing for the period through February 15, 2023.

Such prepaid interest shall be paid in a number of shares of the Company’s common stock, par value $ 0.01 (“Common Stock”) equal to the dollar amount of such prepaid interest, divided by $ 0.7913 (the consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $ 0.01 ), which was 9,720,291 shares.

For all applicable periods following the February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly.

Debt issuance costs associated with the Notes were $ 44 and we capitalized as part of the carrying value of the promissory notes payable to related parties.

The Company incurred interest expense of $ 3,105 for the year ended December 31, 2022, which included amortized imputed interest of $ 395 .

Imputed interest is calculated as the difference between the expected interest payable and the deemed market rate of interest and is recorded as a debt discount at inception of the note payable with a credit to additional paid-in capital for notes payable to related parties.

The debt discount is amortized to interest expense using an effective interest rate method.

The effective interest rate of the Duggan February Note and Zanganeh Note was 8.7 % and the effective interest rate of the Duggan September Note was 8.8 %.

The Company incurred interest expense of $ 244 for the year ended December 31, 2021, which included amortized imputed interest $ 159 for the year ended December 31, 2021, respectively, related to the March 24, 2021 Note Purchase Agreement with Mr.

Duggan, for $ 55,000 which was subsequently rescinded and replaced by a second note on April 20, 2021, of the same amount, and paid in full in May 2021, as described further in Note 22.

As of December 31, 2022, and reflecting the Company's election to extend the term of the Duggan February Note and the Duggan September Note, the estimated future principal payments due were as follows:

Year Ending December 31,

2023 $ 20,000

On February 15, 2023, the $ 20,000 Zanganeh Note matured and the Company repaid the outstanding principal balance.

In connection with the closing of the rights offering, the $ 400,000 Duggan Promissory Note matured and became due, and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from this rights offering.

Other Non-Current Liabilities

2 unchanged sentences

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 gonorrhoeae program.

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.

In conjunction with the significant change in the Company’s strategy and shift in focus to the therapeutic area of oncology, the Company determined that it will cease further investment in the Discuva platform and evaluate further options for the use of the Discuva Platform.

As a result, management has revised the estimated presented value of these payments and remeasured the contingent liabilities.

This resulted in recording a gain on remeasurement of liabilities of $ 1,265 during the year ended December 31, 2022, which is included net as part of the research and development expenses in the consolidated statement of operations and comprehensive loss.

There were no remeasurement losses or gains recognized during the year ended December 31, 2021.

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Stockholders' Equity

Reverse Stock Split

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.

In August 2022, the Company announced the closing of its 2022 rights offering ("2022 Rights Offering).

The rights offering commenced on July 18, 2022, and the associated subscription rights expired on August 8, 2022.

The 2022 Rights Offering received aggregate gross proceeds of $ 100,000 from the sale of 103,092,783 shares of common stock.

Duggan and Dr.

Zanganeh fully subscribed to their respective basic subscription rights and oversubscribed, at a price per share of $ 0.97 .

Offering costs of $ 111 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.

On May 12, 2021, the Company closed its rights offering ("2021 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.

9 unchanged sentences

The remaining 559,787 of outstanding warrants are held by Dr.

Maky Zanganeh and Dr.

Elaine Stracker (see Note 20).

Zanganeh and Dr.

Elaine Stracker.

Warrants granted over shares of common stock to consultants in exchange of certain services are similar to stock-based compensation (see Note 20).

The Company had 5,821,137 total warrants outstanding as of December 31, 2022 and 2021, respectively, and an intrinsic value of $ 15,640 as of December 31, 2022 and $ 6,559 as of December 31, 2021.

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.

2 unchanged sentences

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 is needed.

Upon the effectiveness of the 2020 Stock Incentive Plan, no additional grants will be made under the 2016 Long Term Incentive Plan, (the "2016 Plan") and any outstanding awards continue with their original terms.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2020 Stock Award Plan

In September 2020, the Company’s Board of Directors approved the 2020 Stock Incentive Plan (the “2020 Plan”), which became effective on September 21, 2020.

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 2020 plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

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, 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.

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 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.

On July 27, 2022, the Company held a Special Meeting of Stockholders (the "Special Meeting") whereby the following matters were submitted to a vote of the Company's stockholders at the Special Meeting and the Board of Directors resolved the following:

(i) an amendment to the Company's Restated Certificate of Incorporation, dated September 18, 2020, to increase the number of authorized shares of common stock by 100,000,000 (from 250,000,000 to 350,000,000 );

and (ii) an amendment to the Summit Therapeutics Inc.

2020 Stock Incentive Plan (the "Plan") to increase the number of shares of the Company's common stock issuable under the Plan by 8,000,000 shares.

As of December 31, 2022, there are 5,879,768 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.

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 lesser 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, 2022, there were 2,628,893 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.

The first offering period of the 2020 ESPP plan consisted of seven months , commencing on August 2, 2021 and completed on February 28, 2022.

The second offering period commenced on March 1, 2022 and was completed on August 31, 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.

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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

In the absence of a determination by the Board of Directors or the Compensation Committee, the 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.

During the fiscal year ended December 31, 2022, 176,857 shares were issued under the 2020 ESPP.

As the first offering period of the 2020 ESPP plan completed during the fiscal year ended December 31, 2022, no shares were issued under the 2020 ESPP during the fiscal year ended December 31, 2021.

Summit Therapeutics Inc.

1 unchanged sentence

(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.

Stock Option Valuation

17 unchanged sentences

Exercisable at December 31, 2022 3,895,109 $ 4.91 8.0 years $ 1,652

During the year ended December 31, 2022, the Compensation Committee of the Company's Board of Directors and management approved 6,984,000 option grants to its executives and certain employees of the Company which will vest based upon certain market-based and revenue performance conditions.

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $ 0.87 and $ 3.50 , per share, respectively.

3 unchanged sentences

This amount is expected to be recognized over a weighted average period of approximately 1.8 years.

This excludes unvested market-based and performance stock options outstanding that were deemed not probable of vesting as of December 31, 2022, constituting 6,764,000 shares with unrecognized stock-based compensation expense of $ 4,655 , for which the timing of recognition will be determined once the conditions for achievement become probable.

Summit Therapeutics Inc.

5 unchanged sentences

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

The Company's outstanding restricted stock units ("RSUs") consist of nominal-cost options which were granted to non-executive directors.

The following table summarizes the activity relating to RSUs for the year ended December 31, 2021:

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 Company is recognizing the newly assessed measurement date fair value of the awards as compensation expense over the remaining vesting period.

The fair value of warrants is estimated on the date of grant using the Black-Scholes valuation methodology.

2 unchanged sentences

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, as the warrants were issued prior to the Redomiciliation.

Gilts rate at grant date that most closely matches the expected term of the grant, as the warrants were issued when the Company was domiciled in the U.K..

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.

1 unchanged sentence

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).

As of December 31, 2022, 5,821,137 warrants were granted, of which 559,787 warrants were granted to consultants and 5,261,350 warrants were granted to investors.

All warrants are considered vested at December 31, 2022, have a weighted-average exercise price of $ 1.56 , an aggregate intrinsic value of $ 15,640 , and a weighted average remaining contractual life of 3.5 years.

At December 31, 2022, there was no unrecognized compensation expense related to warrants.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Stock-Based Compensation

9 unchanged sentences

At December 31, 2022 and 2021, the Company had no capital commitments.

Lease commitments

Refer to Note 16 for a discussion of the Company's lease commitments.

Debt commitments

Refer to Note 17 for discussion of promissory notes payable to related parties.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Other commitments

1 unchanged sentence

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 .

As of December 31, 2022, total contractual commitments, excluding leases commitments and debt commitments, are estimated to be approximately $ 11,510 and the majority of these commitments are due within one year .

The Company has certain commitments under its agreements with the Akeso, Wellcome Trust, the University College London and certain employees, former employees and former directors of Discuva, pursuant to which it will be required to pay royalties or make milestone payments.

The License Agreement with Akeso also contains certain manufacturing and purchase commitments.

As of December 31, 2022, the Company is unable to estimate the amount, timing or likelihood of achieving the milestones, making future product sales or assessing estimated forecasts for manufacturing and supplied materials which these contingent payment obligations relate to.

Indemnifications

7 unchanged sentences

Related Party Transactions

On December 6, 2019, the Company entered into a deed of termination of the relationship agreement with Mr.

Duggan and Cairn Financial Advisers LLP, a limited liability partnership incorporated in England and Wales with the Registrar of Companies of England and Wales, as the Company's nominated adviser.

The relationship agreement regulated the Company’s relationship with Mr.

Duggan and limited Mr.

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 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.

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.

In addition to such monthly fee, MZA was granted warrants over 3,358,732 shares of common stock with an exercise price of $ 1.44 per share, vesting on a quarterly basis over three years from the date of grant, subject to MZA’s provision of consultancy services to the Company during such period.

During the period of MZA's engagement, $ 470 of consultancy fees were incurred by the Company and a warrant expense of $ 512 was recognized.

The consultancy agreement with MZA was terminated by mutual agreement on June 30, 2020.

The warrants granted to MZA were subsequently assigned to Dr.

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.

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 %.

Duggan, the Company's Executive Chairman and Chief Executive Officer and primary stockholder, entered into a Note Purchase Agreement (the “Initial 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 “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 United States Treasury rate, as adjusted monthly.

The rate was initially estimated to be approximately 2.4 %.

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.

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.

April 20, 2021 Note Purchase Agreement

1 unchanged sentence

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 Second Note accrued interest at a rate per annum equal to 150 % of the applicable 10 Year United States 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

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

May 12, 2021 Rights Offering ("2021 Rights Offering")

On May 12, 2021, the Company closed its 2021 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.

Aggregate gross proceeds from the 2021 Rights Offering were $ 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.

Zanganeh, at price of $ 5.24 per share.

In connection with the closing of the 2021 Rights Offering, the Second Note, issued by the Company to Mr.

Duggan, matured and became due and was repaid using a portion of the proceeds from the 2021 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.

March 26, 2021 Sublease Agreement with Maky Zanganeh and Associates, Inc.

On March 26, 2021, the Company entered into a sublease with Maky Zanganeh and Associates, Inc.

("MZA") consisting of 4,500 square feet of office space at 2882 Sand Hill Road, Menlo Park, California (the “Sublease”).

Zanganeh, the Company's Co-Chief Executive Officer and President, is the sole owner of MZA.

The sublease ran until September 2022.

The rent payable under the terms of the sublease was 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 years ended December 31, 2022 and 2021, payments of $ 544 and $ 556 , were made pursuant to the sublease.

July 25, 2022 First Amendment to Sublease Agreement with Maky Zanganeh and Associates, Inc.

On July 25, 2022 the Company entered into a first amendment, dated July 19, 2022, to its existing sublease agreement with MZA, described above.

The existing sublease term, which was set to expire on September 30, 2022, was extended for a period of thirty-nine months from October 1, 2022 through December 31, 2025.

The rent payable under the terms of the sublease is equivalent to the proportionate share of the net 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.

July 29, 2022 Second Amendment to Sublease Agreement with Maky Zanganeh and Associates, Inc.

On July 29, 2022, the Company entered into a second amendment, dated August 1, 2022, to its existing sublease agreement with MZA, described above.

The second amendment was effective as of August 1, 2022 and expires on December 31, 2025.

The second amendment includes an additional 1,277 square feet (the "Expansion Premises") of office space at 2882 Sand Hill Road, Menlo Park, California.

During the year ended December 31, 2022 payments of $ 54 , were made pursuant to the secondment amendment to the sublease.

March 10, 2022 Note Purchase Agreement

On March 10, 2022, the Company entered into a Note Purchase Agreement (the "March 2022 Note"), with Mr.

Duggan, pursuant to which Mr.

Duggan 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 March 2022 Note accrued interest at a rate per annum equal to the prime rate as reported in the Wall Street Journal , which was 3.25 % as of the effective date and 4.75 % as of June 30, 2022.

The March 2022 Note, including accrued interest, became 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 March 2022 Note, and was repaid on August 10, 2022.

2022 Rights Offering ("2022 Rights Offering")

In August 2022, the Company announced the closing and final results of its previously announced rights offering.

The 2022 Rights Offering commenced on July 18, 2022, and the associated subscription rights expired on August 8, 2022.

Aggregate gross proceeds received from the rights offering were $ 100,000 from the sale of 103,092,783 shares of common stock.

Duggan and Dr.

Zanganeh fully subscribed to their respective basic subscription rights and oversubscribed, at a price of $ 0.97 per share.

Issuance costs were $ 111 .

In connection with the closing of the 2022 Rights Offering, the March 2022 Note matured and became due, and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from the 2022 Rights Offering on August 10, 2022.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

December 6, 2022 Note Purchase Agreement

On December 6, 2022, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement"), with Mr.

Duggan and Dr.

Zanganeh, pursuant to which the Company agreed to sell to each of Mr.

Duggan and Dr.

Zanganeh unsecured promissory notes in the aggregate amount of $ 520,000 .

Pursuant to the Note Purchase Agreement, the Company issued to Mr.

Duggan and Dr.

The maturity dates of the December 2022 Notes could be extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024.

On January 19, 2023, the Company provided notice to extend the term of the Duggan February Note and Duggan September Note to a maturity date of September 6, 2024.

Furthermore, on January 19, 2023, the Company and Mr.

The Notes accrue interest at an initial rate of 7.5 %.

All interest on the Notes shall be paid on the date of signing for the period through February 15, 2023.

For all applicable periods following the February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the United States prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the United States prime rate plus 300 basis points, as adjusted monthly.

Subsequent Events

Akeso Collaboration and License Agreement

On December 5, 2022, the Company entered into the License Agreement with Akeso, which is detailed further in Note 1.

The License Agreement closed on January 17, 2023, and both Akeso and Summit entered into the Common Stock Issuance Agreement (“Issuance Agreement”).

Pursuant to the License Agreement and Issuance Agreement, Akeso elected to receive 10 million shares of Company common stock in lieu of cash and was paid $ 274,900 in cash as the initial upfront payment.

The remaining $ 200,000 of the upfront payment was paid on March 6, 2023.

As regulatory approval for ivonescimab has not yet been granted, the Company will record in-process research and development expenses in the first quarter of 2023 for the cash payments of $ 474,900 and for the fair market value of the 10 million shares issued to Akeso.

Summit Therapeutics Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

Maturity date extension and rectification of promissory notes issued pursuant to the Note Purchase Agreement

As disclosed in Notes 17 and 22, on January 19, 2023, the Company provided notice to extend the term of the Duggan February Note and Duggan September Note to a maturity date of September 6, 2024.

Furthermore, on January 19, 2023, the Company and Mr.

Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent, see Notes 17 and 22 for further details.

2023 Rights Offering ("Rights Offering")

On December 6, 2022, the Company announced a rights offering for its existing shareholders to participate in the purchase of additional shares of its common stock.

The Rights Offering commenced on February 7, 2023 and the associated subscription rights expired on March 1, 2023.

Aggregate gross proceeds from the Rights Offering were $ 500,000 from the sale of 476,190,471 shares of the Company's common stock at a price of $ 1.05 per share.

Issuance costs were approximately $ 500 .

Repayment of promissory notes

On February 15, 2023, the $ 20,000 Zanganeh Note matured and the Company repaid the outstanding principal balance.

In connection with the closing of the Rights Offering, the $ 400,000 Duggan Promissory Note, which is defined in Note 17, matured and became due, and the Company repaid all principal and accrued interest thereunder using a portion of the proceeds from the Rights Offering.

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