Sareum Holdings — SDC-1801 on the way to the clinic

Sareum Holdings (AIM: SAR)

Last close As at 24/06/2024

GBP0.43

4.50 (11.84%)

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Research: Healthcare

Sareum Holdings — SDC-1801 on the way to the clinic

In an encouraging development, Sareum announced that its clinical trial application to commence Phase I studies for its lead asset, SDC-1801 (a TYK2/JAK1 inhibitor), has been approved by Australian authorities. Sareum had filed its application in March 2023 under the Clinical Trial Notification Scheme (CTN) after stalled discussions with the UK Medicines and Healthcare products Regulatory Agency (MHRA) for SDC-1801’s clinical trial authorisation (CTA) application based on the submitted data package. Following the Australian approval, Sareum intends to initiate the Phase Ia clinical trial (safety and dose-finding study in healthy volunteers) in Q223, which if successful will be followed by a Phase Ib study in 2024 in patients with plaque psoriasis. With burn rates likely to rise with trial commencement (c £0.5m/quarter currently), we expect Sareum will need to raise additional funds before end-CY23 (H123 cash balance of £2.9m).

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Sareum Holdings

SDC-1801 on the way to the clinic

Pharma and biotech

Spotlight – Flash

9 May 2023

Price

143p

Market cap

£97m

Share price graph

Share details

Code

SAR

Listing

AIM

Shares in issue

68.07m

Net cash at 31 December 2022

£2.9m

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 pre-clinical data), Sareum will initiate clinical trials in Australia in Q223. 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.

Bull

SDC-1801’s novel TYK2 selectivity may be attractive to partners, pending clinical validation.

First-in-class opportunity for SDC-1802 in multiple cancer indications.

Approval of Sotyktu provides regulatory feasibility of TYK2 inhibitors.

Bear

Safety profile of combined TYK2/JAK1 inhibitor not certain or proved yet.

Potential funding challenges delaying clinical progress of SDC-1801 and SDC-1802.

Markets sought by SDC-1801 and SDC-1802 are highly competitive.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Nidhi Singh

+44 (0)20 3077 5700

Sareum Holdings is a research client of Edison Investment Research Limited

In an encouraging development, Sareum announced that its clinical trial application to commence Phase I studies for its lead asset, SDC-1801 (a TYK2/JAK1 inhibitor), has been approved by Australian authorities. Sareum had filed its application in March 2023 under the Clinical Trial Notification Scheme (CTN) after stalled discussions with the UK Medicines and Healthcare products Regulatory Agency (MHRA) for SDC-1801’s clinical trial authorisation (CTA) application based on the submitted data package. Following the Australian approval, Sareum intends to initiate the Phase Ia clinical trial (safety and dose-finding study in healthy volunteers) in Q223, which if successful will be followed by a Phase Ib study in 2024 in patients with plaque psoriasis. With burn rates likely to rise with trial commencement (c £0.5m/quarter currently), we expect Sareum will need to raise additional funds before end-CY23 (H123 cash balance of £2.9m).

Historical financials

Year

end

Revenue
(£m)

PBT
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

P/E
(x)

Yield
(%)

06/19

0.00

(1.7)

(2.6)

0.0

N/A

N/A

N/A

N/A

06/20

0.04

(1.1)

(1.6)

0.0

N/A

N/A

N/A

N/A

06/21

0.00

(1.7)

(2.3)

0.0

N/A

N/A

N/A

N/A

06/22

0.00

(2.6)

(3.2)

0.0

N/A

N/A

N/A

N/A

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

The Phase Ia study for SDC-1801 will investigate the safety and pharmacokinetics of SDC-1801 in ascending doses administered to healthy adults. Patient enrolment is expected to commence in June 2023. If safety is established, Sareum plans to follow up with the Phase Ib part of the study in 2024 in patients with plaque psoriasis. Psoriasis is an autoimmune chronic skin condition affecting over 60 million adults worldwide. The psoriasis treatment market was estimated by Precedence Research to be over $27bn in 2022 and is projected to grow to over $50bn by 2030. The current treatment landscape is dominated by biologics, although oral alternatives, such as SDC-1801, may offer the advantage of easier administration.

As a reminder, SDC-1801 is a novel TYK2/JAK1 inhibitor, targeting autoimmune indications, with an initial focus on psoriasis. In November 2022, the UK MHRA informed Sareum that it would not approve the CTA until an additional review of certain preclinical data was completed by the UK Good Laboratory Practice Monitoring Authority. With no visible progress in discussions, Sareum decided to pivot its focus to Australia as an alternate location to conduct the SDC-1801 Phase I trials, and filed an application in March 2023 under the CTN scheme.

We view Sareum’s decision to conduct clinical trials of SDC-1801 in Australia as logical, given the country’s strong infrastructure, conducive regulatory environment and relatively low study costs, along with government tax incentives to early-stage companies (rebates of up to 43.5% of eligible R&D expenditure). We estimate the company may require additional funds to start the Phase Ib study planned for CY24, given our expectation (refer to our previous note) that it will need to raise additional funds before the end of CY23.

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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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 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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