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Summit Corporation – Announces a Novel Alzheimer Drug Candidate – Data to be Presented at Major Global Alzheimer Conference; Target Price 7.8p

Summit Corporation, the UK based drug discovery company using its innovative Seglin™ drug discovery platform to identify candidates for areas of high unmet clinical need ,has announced positive news, this time from its neurological diseases programme that again demonstrate the potential for this valuable technology platform.

The company has reported positive data for the development of a disease modifying treatment for Alzheimer’s disease particularly as well as other neurological disorders, through the targeting of an enzyme, O-linked N-acetylglucosaminidase (‘OGA’).

Alzheimer’s disease, a disease of high unmet clinical need, is a progressive and debilitating neurodegenerative disorder that is the most common form of dementia; symptoms include memory loss, change in mood and personality, and a decline in cognitive abilities.

Studies have shown that one of the characteristics of Alzheimer’s disease is the formation in the brain of tangles of abnormal tau protein that are believed to be a major factor in the progression of the disease. A normal tau protein maintains the healthy function of brain’s nerve cells, however, in an Alzheimer’s patient abnormal tau protein is found in the brain, which destabilises cells and results in the formation of toxic protein tangles and ultimately disease symptoms.

OGA has emerged as a target during Summit’s search for drug candidates for the treatment of Alzheimer’s disease because exhibits the potential to protect nerve cells and prevent formation of toxic tau protein tangles. Moreover, Summit’s innovative Seglin™ drug discovery platform has developed novel, potent and very selective small molecule inhibitors of the OGA enzyme. Furthermore, initial proof of concept has been established in human cell models with these identified Seglin compounds that significantly reduce the levels of abnormal tau protein while further in vitro evaluation shows that the active Seglins exhibit no cell toxicity (cytotoxicity).

Summit will be presenting these results at the Alzheimer’s Association International Conference 2011 (ICAD 2011) that is being held in Paris on 16th – 21st July 2011.

Additionally, Summit remains in detailed discussions with leading biopharma groups for its drug candidates’… and many of these discussions have reached a stage where data is being disclosed … a number of companies have progressed beyond this stage and are actively testing and evaluating the asset(s) of interest.’. While a number of major pharmaceutical companies are expressing interest in the company’s Seglin™ technology.

We remain confident that Summit will close all of its budgeted deals for the current financial year and following last May’s milestone payment from its Wellcome Trust collaboration, already built into to our forecasts, we increased our 2013 EV/Sales multiple a somewhat more demanding 1.5 times, which indicates a target price of 7.8p. Nevertheless, we are keeping our valuation under review and anticipate lifting this toward the 2.5 times that other pharmaceutical companies readily command should once a commercial agreement has been secured. With the shares having risen significantly in recent weeks to the current 7.625p our stance for now is hold.

Forecast Table

Year to 31st January	Sales (£000)	Pre-Tax Profit (£000)	Earnings Per Share (p)	Price Earnings Ratio (x)	Dividend (p)	Yield (%)
2009A	185	(13,100)	(21.26)	NA	0.0	0.0
2010A	189	(4,843)#	(7.2)#	NA	0.0	0.0
2011E	763	(3,271)#	(1.2)#	NA	0.0	0.0
2012E	3,740	(1,600)#	(0.7)#	NA	0.0	0.0
2013E	6,185	1,380#	0.8#	7.1	0.0	0.0

Notes:

#Profit before tax, amortisation, exceptional items and unrealised foreign exchange/derivative gains and losses. Tax charged at 28%.

Key Data
EPIC	SUMM
Share Price	7.625p
Spread	7.5p – 7.75p
Total no of Shares	168.27 million
Market Cap	£12.83 million
NMS	8,000
12 Month Range	2.2p – 8.675p
Net cash	£2.5 million (est. to end April 2011 and excludes Wellcome Trust payment)
Market	AIM
Website	www.summitplc.com
Sector	Biopharma
Contact	Richard Pye – Corporate Development – 01235 443 939