Scandion Oncology — Positive outlook for SCO-101

Scandion Oncology (OMX: SCOL)

Last close As at 28/03/2024

1.36

−0.03 (−2.16%)

Market capitalisation

SEK56m

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Research: Healthcare

Scandion Oncology — Positive outlook for SCO-101

Scandion Oncology is approaching a major inflection point as results from the Phase II CORIST trial of the company’s lead asset, SCO-101, in metastatic colorectal cancer, are expected in Q322. In addition, top-line data from the extended Phase Ib PANTAX study in pancreatic cancer are expected in H123 (previously Q322). In H122, R&D related expenses rose to DKK33.0m, from DKK20.4m in H121, as patient enrolment continued for CORIST and PANTAX. In July 2022, Scandion completed a rights issue, which we estimate will result in a net cash injection of c SEK58m (c DKK41m). At end H122, management reported a cash position of DKK72.7m, however, including net proceeds from the equity raise, we estimate this figure to have risen to c DKK113.7m. At the current burn rate (H122: DKK32.4m), and considering estimated clinical activities, we anticipate the company is funded into FY24, past key readouts in FY22 and FY23. We value Scandion Oncology at SEK609.5m or SEK15.0 per share (previously SEK586.5m or SEK14.4 per share).

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Scandion Oncology

RTW Venture Fund Limited

Positive outlook for SCO-101

H122 update

Pharma and biotech

26 August 2022

Price

SEK6.95

Market cap

SEK283m

SEK10.58/US$; DKK7.46/US$

Net cash (DKKm) at end-Q222
(pre-July rights issue)

72.7

Shares in issue

40.7m

Free float

74%

Code

SCOL

Primary exchange

Nasdaq First North Growth Market

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

20.2

(55.3)

(61.9)

Rel (local)

21.3

(54.4)

(51.9)

52-week high/low

19.06

5.55

Business description

Scandion Oncology is a biotechnology company focused on the development of add-on therapies to reverse chemotherapy resistance in oncology. The company’s lead asset, SCO-101, is currently in Phase II trials for mCRC and Phase Ib trials for pancreatic cancer. Proof-of concept data, expected in Q322, will be crucial in shaping management’s future development plans.

Next events

CORIST Phase II proof-of-concept top-line data

Q322

PANTAX Phase Ib dose escalation data

H123

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Dr Harry Shrives

+44 (0)20 3077 5700

Dr Adam McCarter

+44 (0)20 3077 5700

Scandion Oncology is approaching a major inflection point as results from the Phase II CORIST trial of the company’s lead asset, SCO-101, in metastatic colorectal cancer, are expected in Q322. In addition, top-line data from the extended Phase Ib PANTAX study in pancreatic cancer are expected in H123 (previously Q322). In H122, R&D related expenses rose to DKK33.0m, from DKK20.4m in H121, as patient enrolment continued for CORIST and PANTAX. In July 2022, Scandion completed a rights issue, which we estimate will result in a net cash injection of c SEK58m (c DKK41m). At end H122, management reported a cash position of DKK72.7m, however, including net proceeds from the equity raise, we estimate this figure to have risen to c DKK113.7m. At the current burn rate (H122: DKK32.4m), and considering estimated clinical activities, we anticipate the company is funded into FY24, past key readouts in FY22 and FY23. We value Scandion Oncology at SEK609.5m or SEK15.0 per share (previously SEK586.5m or SEK14.4 per share).

Year end

Revenue
(DKKm)

PBT*
(DKKm)

EPS*
(DKK)

DPS
(DKK)

P/E
(x)

Yield
(%)

12/20

1.0

(21.5)

(0.53)

0.0

N/A

N/A

12/21

0.8

(57.2)

(1.61)

0.0

N/A

N/A

12/22e

0.8

(64.9)

(1.66)

0.0

N/A

N/A

12/23e

0.8

(82.4)

(1.89)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

SCO-101 progressing on both fronts

In H122, the CORIST and PANTAX development programs continued to progress. Notably, ethical approval for part 3 of the CORIST study (focusing on mutant-RAS patients) has been received, which is now expected to begin patient recruitment in Q322. Furthermore, encouraging patient tolerability data from the PANTAX dose-escalation study has resulted in a dose expansion. Accordingly, top-line readouts from PANTAX are now expected in H123 (previously Q322).

Capital raise funded into FY24

In July 2022 Scandion completed a rights issue, raising gross proceeds of c SEK75m. Based on estimated transaction costs of SEK17m (DKK12m), we estimate it will result in a net cash injection of c SEK58m (DKK41m). The extension of CORIST has led us to revise our R&D estimates down for FY23; however, management has indicated that overall trial timelines will not be affected. We anticipate Scandion will be funded past key readouts into FY24.

Valuation: SEK609.5m or SEK15.0 per share

We value Scandion at SEK609.5m or SEK15.0 per share (previously SEK586.5m or SEK14.4 per share) based on a risk-adjusted NPV of SCO-101 using a 12.5% discount rate and including net cash of SEK72.7m at end H122. Value uplift was realised by rolling our model forwards and including the net rights issue proceeds (SEK58m).

Scandion Oncology is a research client of Edison Investment Research Limited

Exhibit 1: Financial summary

Accounts: IFRS, year-end: 31 December; DDK’000s

 

 

2020

2021

2022e

2023e

PROFIT & LOSS

 

 

 

 

 

 

Total revenues

 

 

1,003

797

797

797

Cost of sales

 

 

0

0

0

0

Gross profit

 

 

1,003

797

797

797

Total operating expenses

 

 

(24,758)

(56,164)

(65,160)

(83,165)

Research and development expenses

 

 

(21,672)

(47,711)

(52,480)

(70,485)

SG&A

 

 

(3,086)

(8,453)

(12,680)

(12,680)

EBITDA (normalized)

 

 

(23,474)

(54,763)

(63,980)

(81,986)

Operating income (reported)

 

 

(23,755)

(55,367)

(64,363)

(82,368)

Operating margin %

 

 

N/A

N/A

N/A

N/A

Finance income/(expense)

 

 

2,233

(1,846)

(576)

0

Exceptionals and adjustments

 

 

0

0

0

0

Profit before tax (reported)

 

 

(21,522)

(57,213)

(64,939)

(82,368)

Profit before tax (normalised)

 

 

(21,522)

(57,213)

(64,939)

(82,368)

Income tax expense (includes exceptionals)

 

 

4,384

5,508

5,508

5,508

Net income (reported)

 

 

(17,138)

(51,705)

(59,431)

(76,860)

Net income (normalised)

 

 

(17,138)

(51,705)

(59,431)

(76,860)

Basic average number of shares, m

 

 

32.1

32.1

35.9

40.7

Basic EPS (DKK)

 

 

(0.53)

(1.61)

(1.66)

(1.89)

Adjusted EPS (DKK)

 

 

(0.53)

(1.61)

(1.66)

(1.89)

Dividend per share (DKK)

 

 

0.00

0.00

0.00

0.00

BALANCE SHEET

 

 

 

 

 

 

Tangible assets

 

 

136

386

338

306

Intangible assets

 

 

0

0

0

0

Right-of-use assets

 

 

312

1,215

1,215

1,215

Other non-current assets

 

 

148

314

314

314

Total non-current assets

 

 

596

1,915

1,867

1,835

Cash and equivalents

 

 

5,814

105,710

80,625

2,312

Current tax receivables

 

 

4,384

5,500

5,500

5,500

Trade and other receivables

 

 

1,414

2,018

1,748

1,748

Other current assets

 

 

174,513

1,076

787

787

Total current assets

 

 

186,125

114,304

88,660

10,347

Non-current loans and borrowings

 

 

8

0

0

0

Non-current lease liabilities

 

 

0

500

500

500

Other non-current liabilities

 

 

504

84

1,390

1,390

Total non-current liabilities

 

 

512

584

1,890

1,890

Accounts payable

 

 

26,064

4,580

10,954

10,954

Illustrative debt

 

 

0

0

0

0

Current lease obligations

 

 

316

723

305

305

Other current liabilities

 

 

3,962

5,791

6,810

6,810

Total current liabilities

 

 

30,342

11,094

18,069

18,069

Equity attributable to company

 

 

155,867

104,541

70,568

(7,777)

CASH FLOW STATEMENT

 

 

 

 

 

 

Operating income

 

 

(23,755)

(55,367)

(64,363)

(82,368)

Depreciation and amortisation

 

 

281

604

382

382

Share based payments

 

 

0

0

0

0

Other adjustments

 

 

4,223

2,899

4,023

4,023

Movements in working capital

 

 

2,024

2,066

(5,815)

0

Cash from operations (CFO)

 

 

(17,227)

(49,798)

(65,772)

(77,963)

Capex

 

 

(46)

(318)

(334)

(351)

Acquisitions & disposals net

 

 

0

(167)

25

0

Other investing activities

 

 

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(46)

(485)

(309)

(351)

Capital changes

 

 

7,892

150,690

40,800

0

Debt Changes

 

 

0

0

0

0

Other financing activities

 

 

(226)

(511)

(380)

0

Cash from financing activities (CFF)

 

 

7,666

150,179

40,420

0

Cash and equivalents at beginning of period

 

 

15,421

5,814

105,710

80,625

Increase/(decrease) in cash and equivalents

 

 

(9,607)

99,896

(25,661)

(78,313)

Effect of FX on cash and equivalents

 

 

0

0

0

0

Cash and equivalents at end of period

 

 

5,814

105,710

80,049

2,312

Net (debt)/cash

 

 

5,806

105,710

80,625

2,312

Source: Company accounts, Edison Investment Research. Note: Includes shares raised following July 2022 rights issue.

General disclaimer and copyright

This report has been commissioned by Scandion Oncology and prepared and issued by Edison, in consideration of a fee payable by Scandion Oncology. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Scandion Oncology and prepared and issued by Edison, in consideration of a fee payable by Scandion Oncology. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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