Scandion Oncology — An active quarter with AML plans in the mix

Scandion Oncology (OMX: SCOL)

Last close As at 17/05/2024

1.36

−0.03 (−2.16%)

Market capitalisation

SEK56m

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Research: Healthcare

Scandion Oncology — An active quarter with AML plans in the mix

Q123 has been an active quarter for Scandion Oncology with completion of the Phase 1b PANTAX (dose-finding) study and management’s decision to expand the scope of SCO-101 into acute myeloid leukaemia (AML). With many upcoming catalysts, including an update on AML preclinical work in H223, top-line results for CORIST part 3 in H223, and full top-line data for PANTAX by H124, if favourable, we expect material progression of the company’s pipeline. Scandion reported an operating loss of DKK12.0m in Q123 (vs DKK16.3m in Q122) mainly due lower R&D expenses, reflecting the impact of cost control measures announced by management in H222. After updating the net cash position and incorporating the impact of foreign exchange, our valuation of Scandion stands at SEK240.0m or SEK5.9/share (vs SEK238.2m or SEK5.8/share previously).

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Scandion Oncology

An active quarter with AML plans in the mix

Q123 update

Pharma and biotech

30 May 2023

Price

SEK1.56

Market cap

SEK64m

SEK10.7/US$; DKK0.64/SEK

Net cash (SEKm) at end March 2023

94.0

Shares in issue

40.7m

Free float

86%

Code

SCOL

Primary exchange

Nasdaq First North Growth Market

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.5)

(26.7)

(89.4)

Rel (local)

(11.4)

(25.5)

(89.5)

52-week high/low

SEK14.46

SEK1.48

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 in Phase II trials for mCRC and Phase Ib trials for pancreatic cancer.

Next events

AML preclinical data

H223

CORIST part 3 top-line data

H223

PANTAX Phase Ib top-line data

H124

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

Nidhi Singh

+44 (0)20 3077 5700

Scandion Oncology is a research client of Edison Investment Research Limited

Q123 has been an active quarter for Scandion Oncology with completion of the Phase 1b PANTAX (dose-finding) study and management’s decision to expand the scope of SCO-101 into acute myeloid leukaemia (AML). With many upcoming catalysts, including an update on AML preclinical work in H223, top-line results for CORIST part 3 in H223, and full top-line data for PANTAX by H124, if favourable, we expect material progression of the company’s pipeline. Scandion reported an operating loss of DKK12.0m in Q123 (vs DKK16.3m in Q122) mainly due lower R&D expenses, reflecting the impact of cost control measures announced by management in H222. After updating the net cash position and incorporating the impact of foreign exchange, our valuation of Scandion stands at SEK240.0m or SEK5.9/share (vs SEK238.2m or SEK5.8/share previously).

Year end

Revenue
(DKKm)

PBT*
(DKKm)

EPS*
(DKK)

DPS
(DKK)

P/E
(x)

Yield
(%)

12/21

0.8

(57.2)

(1.61)

0.0

N/A

N/A

12/22

2.1

(82.2)

(1.87)

0.0

N/A

N/A

12/23e

0.6

(65.3)

(1.47)

0.0

N/A

N/A

12/24e

0.6

(69.4)

(1.57)

0.0

N/A

N/A

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

AML a third shot on goal for SCO-101

A highlight of Q123 was the announcement that Scandion will expand SCO-101 into AML. The company is currently conducting preclinical research on SCO-101’s potential in this indication, using cells from AML patients and looking at synergistic effects with chemotherapies. An update on this is expected in H223, representing a significant catalyst, in our view. Provided the data are positive, the company then plans to initiate a Phase Ib trial to assess the safety of SCO-101 in combination with chemotherapy and establish the maximum tolerated dose (MTD).

Positive PANTAX readout and on course for CORIST

The Phase Ib PANTAX trial in pancreatic cancer has reached its primary endpoint, establishing the MTD of SCO-101 in combination with chemotherapy at 200mg for six consecutive days every two weeks. The final analysis of the PANTAX data will be shared in H124. SCO-101 is also being assessed in the Phase II CORIST trial in colorectal cancer, part 3 of the study, to determine the optimised dosing regimen. Patient recruitment is ongoing, and expected to be complete with top-line results in H223. We believe that management will wait for both these updates before confirming further clinical development plans for SCO-101 in these indications.

Valuation: SEK240.0m or SEK5.9 per share

We value Scandion at SEK240.0m or SEK5.9/share, slightly up from SEK238.2m or SEK5.8/share previously. While our long-term assumptions remain unchanged, the increase in valuation is mainly driven by an updated exchange rate (DKK0.64/SEK from DKK0.67/SEK) and rolling forward our model by three months, partially offset by lower net cash of SEK94.0m at end March 2023, from SEK115.8m previously.

Valuation

We value Scandion based on a risk-adjusted net present value (rNPV) analysis using a 12.5% discount rate. Our current valuation is wholly attributed to SCO-101 in both metastatic colorectal cancer (mCRC) and pancreatic cancer (PC) and excludes pre-clinical assets (SCO-201) and a possible third indication for SCO-101, AML, which may offer further upside on successful clinical progress. Following Q123 results, our forecasts and long-term assumptions remain unchanged. Our updated valuation now stands at SEK240.0m or SEK5.9/share (SEK238.2m or SEK5.8/share previously), which incorporates the impact of a lower net cash position (SEK94.0m at end Q123 vs SEK115.8m in Q122), foreign exchange (DKK0.64/SEK from DKK0.67/SEK previously) and rolling forward the model by three months.

Exhibit 1: Scandion Oncology valuation

Product

Indication

Launch

Peak

Peak sales ($m)

Value (SEKm)

Probability

rNPV
(SEKm)

rNPV/share (SEK)

SCO-101

mCRC

2028

2032

297.3

850.3

10%

69.6

1.7

SCO-101

PC

2029

2033

456.7

868.9

10%

76.4

1.9

Net cash at end 31 March 2023

 

 

 

 

94.04

100%

94.0

2.3

Valuation

 

 

 

 

1,813.2

 

240.0

5.9

Source: Edison Investment Research

Exhibit 2: Financial summary

Accounts: IFRS; year end: 31 December; DDK:000s

 

 

2021

2022

2023e

2024e

PROFIT & LOSS

 

 

 

 

 

 

Total revenues

 

 

797

2,057

600

600

Cost of sales

 

 

0

0

0

0

Gross profit

 

 

797

2,057

600

600

Total operating expenses

 

 

(56,164)

(82,223)

(66,548)

(70,179)

Research and development expenses

 

 

(47,711)

(65,065)

(60,000)

(63,500)

SG&A

 

 

(8,453)

(17,158)

(6,548)

(6,679)

EBITDA (normalized)

 

 

(54,763)

(79,284)

(65,311)

(68,993)

Operating income (reported)

 

 

(55,367)

(80,166)

(65,948)

(69,579)

Operating margin %

 

 

N/A

N/A

N/A

N/A

Finance income/(expense)

 

 

(1,846)

(2,034)

684

159

Exceptionals and adjustments

 

 

0

0

0

0

Profit before tax (reported)

 

 

(57,213)

(82,200)

(65,264)

(69,420)

Profit before tax (normalised)

 

 

(57,213)

(82,200)

(65,264)

(69,420)

Income tax expense (includes exceptionals)

 

 

5,508

5,500

5,500

5,500

Net income (reported)

 

 

(51,705)

(76,700)

(59,764)

(63,920)

Net income (normalised)

 

 

(51,705)

(76,700)

(59,764)

(63,920)

Basic average number of shares, m

 

 

32.1

40.7

40.7

40.7

Basic EPS (DKK)

 

 

(1.61)

(1.87)

(1.47)

(1.57)

Adjusted EPS (DKK)

 

 

(1.61)

(1.87)

(1.47)

(1.57)

Dividend per share (DKK)

 

 

0.00

0.00

0.00

0.00

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

Tangible assets

 

 

386

659

807

1,000

Intangible assets

 

 

0

0

0

0

Right-of-use assets

 

 

1,215

1,597

1,279

986

Other non-current assets

 

 

314

290

258

229

Non-current tax receivables

 

 

0

0

0

0

Total non-current assets

 

 

1,915

2,546

2,344

2,215

Cash and equivalents

 

 

105,710

77,605

18,043

54,253

Current tax receivables

 

 

5,500

5,500

5,500

5,500

Trade and other receivables

 

 

2,018

3,023

3,023

3,023

Other current assets

 

 

1,076

727

727

727

Total current assets

 

 

114,304

86,855

27,293

63,503

Non-current loans and borrowings

 

 

0

0

0

100,000

Non-current lease liabilities

 

 

500

820

820

820

Other non-current liabilities

 

 

84

0

0

0

Total non-current liabilities

 

 

584

820

820

100,820

Accounts payable

 

 

4,580

4,895

4,895

4,895

Illustrative debt

 

 

0

0

0

0

Current lease obligations

 

 

723

776

776

776

Other current liabilities

 

 

5,791

12,583

12,583

12,583

Total current liabilities

 

 

11,094

18,254

18,254

18,254

Equity attributable to company

 

 

104,541

70,327

10,563

(53,356)

 

 

 

 

 

 

 

CASH FLOW STATEMENT

 

 

 

 

 

 

Operating income

 

 

(55,367)

(80,166)

(65,948)

(69,579)

Depreciation and amortisation

 

 

604

882

637

586

Share based payments

 

 

0

0

0

0

Other adjustments

 

 

2,899

3,466

6,184

5,659

Movements in working capital

 

 

2,066

6,375

0

0

Cash from operations (CFO)

 

 

(49,798)

(69,443)

(59,127)

(63,334)

Capex

 

 

(318)

(414)

(435)

(456)

Acquisitions & disposals net

 

 

(167)

25

0

0

Other investing activities

 

 

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(485)

(389)

(435)

(456)

Capital changes

 

 

150,690

42,487

0

0

Debt Changes

 

 

0

0

0

100,000

Other financing activities

 

 

(511)

(760)

0

0

Cash from financing activities (CFF)

 

 

150,179

41,727

0

100,000

Cash and equivalents at beginning of period

 

 

5,814

105,710

77,605

18,043

Increase/(decrease) in cash and equivalents

 

 

99,896

(28,105)

(59,562)

36,210

Effect of FX on cash and equivalents

 

 

0

0

0

0

Cash and equivalents at end of period

 

 

105,710

77,605

18,043

54,253

Net (debt)/cash

 

 

105,710

77,605

18,043

54,253

Source: Company reports, Edison Investment Research


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 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

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 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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