Sareum Holdings — £5m funding to see SDC-1801 through Phase I

Sareum Holdings (AIM: SAR)

Last close As at 21/05/2024

GBP0.36

4.75 (15.45%)

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Research: Healthcare

Sareum Holdings — £5m funding to see SDC-1801 through Phase I

Ahead of its full FY23 results, Sareum Holdings has received the first instalment (£2m) of its newly announced funding facility (£5m in total). Additionally, management shared an operational update on its lead asset, SDC-1801. The Phase Ia study is progressing as planned and the second part of the study (multiple ascending doses) is expected to start in Q323, subject to approval from the safety review committee. Sareum ended FY23 with a cash balance of £1m, further supported by the announced £5m (gross proceeds) equity prepayment facility, which will be split in five deposits at defined time intervals. Management believes that the prepayment facility, along with expected tax credits of £1.6m, should fund its operations into Q424, thus covering the Phase Ia/b study of SDC-1801.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Sareum Holdings_resized

Healthcare

Sareum Holdings

£5m funding to see SDC-1801 through Phase I

Pharma and biotech

Spotlight - Flash

18 August 2023

Price

88p

Market cap

£61m

Share price graph

Share details

Code

SAR

Listing

AIM

Shares in issue

70.07m

Cash balance at 30 June 2023 (excluding £2m from August 2023 equity prepayment facility)

£1.0m

Business description

Sareum Holdings is a UK-based drug development company, specialising in small molecule kinase inhibitors. Its lead programmes are its preclinical TYK2/JAK1 inhibitors, SDC-1801 for autoimmune diseases and SDC-1802 for cancer. After an unsuccessful clinical trial authorisation application for SDC-1801 with the UK MHRA in July 2022 (approval held pending further review of preclinical data), Sareum initiated clinical trials in Australia in May 2023. Other programmes include CHK1 inhibitor SRA737, the rights of which have recently been returned to Sareum’s co-development partner CRT Pioneer Fund LP from Sierra Oncology.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Nidhi Singh

+44 (0)20 3077 5700

Sareum Holdings is a research client of Edison Investment Research Limited

Ahead of its full FY23 results, Sareum Holdings has received the first instalment (£2m) of its newly announced funding facility (£5m in total). Additionally, management shared an operational update on its lead asset, SDC-1801. The Phase Ia study is progressing as planned and the second part of the study (multiple ascending doses) is expected to start in Q323, subject to approval from the safety review committee. Sareum ended FY23 with a cash balance of £1m, further supported by the announced £5m (gross proceeds) equity prepayment facility, which will be split in five deposits at defined time intervals. Management believes that the prepayment facility, along with expected tax credits of £1.6m, should fund its operations into Q424, thus covering the Phase Ia/b study of SDC-1801.

Historical financials

Year
end

Revenue
(£m)

PBT

(£m)

EPS

(p)

DPS
(p)

P/E

(x)

Yield
(%)

06/19

0.00

(1.7)

(2.6)

0.0

N/A

N/A

06/20

0.04

(1.1)

(1.6)

0.0

N/A

N/A

06/21

0.00

(1.7)

(2.3)

0.0

N/A

N/A

06/22

0.00

(2.6)

(3.2)

0.0

N/A

N/A

Source: Company data. Note: *EPS figures have been adjusted retrospectively for the 50:1 share consolidation in March 2022.

After receiving approval for its clinical trial application from the Australian authorities in May 2023, Sareum started its Phase Ia study for SDC1801, a novel TYK2/JAK1 inhibitor targeting a range of autoimmune indications, with an initial focus on psoriasis (further details in our prior note). The safety review committee will assess the data from the most recent cohort in Part 1 of the study (single ascending dose), and, if approved, Sareum is likely to advance to Part 2 (multiple ascending dose) of the Phase 1a trial in Q323. We note that Part 2 will run in parallel with the additional dose escalation planned for Part 1 of the study. Management expects full safety data from the Phase Ia trial in H124, which, if favourable, could lead to a Phase Ib trial in psoriasis patients, with a readout expected by end-2024.

In another development, Sareum reported two patent wins in June 2023. The first patent related to SDC-1801 in China for inflammatory or immune disorders. We note that this is the first patent granted to SDC-1801 and patent applications are pending in Europe, the US and other regions. A second patent was granted for SDC-1802 (TYK2/JAK1 inhibitor being developed for cancer immunotherapy) in the US for autoimmune disorders, extending its scope beyond immuno-oncology.

To support its development plans, Sareum secured an equity prepayment facility of up to £5m from RiverFort Global Opportunities (a UK-based investment company) in August 2023 and received the first deposit of £2m against the issue of c 1.95m shares at 1.25p each. Second and third deposits of £0.3m each are likely to be received after three and six months, along with a fourth deposit (up to £1.4m) due in six months (subject to pre-agreed conditions). The balance and final deposit (up to £1m) will be mutually agreed between the parties later. Also, the investors will be issued warrants, equal to 45% of each deposit and exercisable at 40% premium to the relevant reference price, which could extend the cash runway further.

General disclaimer and copyright

This report has been commissioned by Sareum Holdings and prepared and issued by Edison, in consideration of a fee payable by Sareum Holdings. 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.

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Copyright: Copyright 2023 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.

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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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Sareum Holdings and prepared and issued by Edison, in consideration of a fee payable by Sareum Holdings. 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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