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Last close As at 17/03/2023
GBP1.93
▲ 8.00 (4.34%)
Market capitalisation
GBP125m
Research: Healthcare
Following the protracted stalemate with the UK Medicines and Healthcare products Regulatory Agency (MHRA) for its clinical trial authorisation (CTA) for SDC-1801, Sareum has now announced the filing of an application to commence Phase I studies for SDC-1801 in Australia under the Clinical Trial Notification scheme. The company intends to initiate the first part of the Phase Ia/b clinical trial (safety and dose-finding study in healthy volunteers) following regulatory approval, expected in Q223. This will be followed by the Phase Ib study in psoriasis patients in 2024, provided safety is established. As a reminder, in November 2022, SDC-1801’s CTA was turned down by the MHRA and Sareum has been awaiting further clarity prior to data resubmission. We note that the net cash balance at end-June 2022 stood at £4.3m and based on historical burn rates of £0.5m per quarter, we estimate Sareum to be able to commence the Phase Ia trial but it will require additional funds to advance the studies.
Sareum Holdings |
SDC-1801 trial application refiled in Australia
Pharma and biotech |
Spotlight - Flash
15 March 2023 |
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Sareum Holdings is a research client of Edison Investment Research Limited |
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Following the protracted stalemate with the UK Medicines and Healthcare products Regulatory Agency (MHRA) for its clinical trial authorisation (CTA) for SDC-1801, Sareum has now announced the filing of an application to commence Phase I studies for SDC-1801 in Australia under the Clinical Trial Notification scheme. The company intends to initiate the first part of the Phase Ia/b clinical trial (safety and dose-finding study in healthy volunteers) following regulatory approval, expected in Q223. This will be followed by the Phase Ib study in psoriasis patients in 2024, provided safety is established. As a reminder, in November 2022, SDC-1801’s CTA was turned down by the MHRA and Sareum has been awaiting further clarity prior to data resubmission. We note that the net cash balance at end-June 2022 stood at £4.3m and based on historical burn rates of £0.5m per quarter, we estimate Sareum to be able to commence the Phase Ia trial but it will require additional funds to advance the studies.
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Historical estimates
Source: Company data. Note: *EPS figures have been adjusted retrospectively for the 50:1 share consolidation in March 2022. |
SDC-1801, a novel TYK2/JAK1 inhibitor, is Sareum’s lead asset, targeting autoimmune indications, with initial focus on psoriasis. The drug selectively targets the TYK2/JAK1 isoforms, thereby circumventing the safety and toxicity issues related to the JAK2 and JAK3 isoforms. The September 2022 approval of Bristol Myers Squibb’s TYK2 inhibitor Sotyktu (deucravacitinib) without the category ‘black box’ warning validates this hypothesis, although we note that SDC-1801’s mechanism of action is somewhat different to Sotyktu.
The decision to refile for clinical trials in Australia has been triggered by the MHRA’s decision to not approve SDC-1801’s CTA application (filed in July 2022). While the exact reasons for the decision remain unclear, we believe the issue may relate to contracted CROs and the submitted non-clinical data. We view the selection of Australia as the alternate clinical trial destination as logical given the strong infrastructure and conducive regulatory environment in the country. Study costs in Australia are significantly lower, with the government offering tax advantages to early-stage companies (R&D rebates of up to 43.5% of eligible R&D expenditure).
Sareum has developed a capsule formulation of SDC-1801 with the synthesis of the drug’s active pharmaceutical ingredient (under good manufacturing practice conditions) completed and available for Phase I studies. Documents required for trial initiation have been filed with a Human Research Ethics Committee in Australia, with a final decision anticipated in Q223. We see the initiation of clinical trials for SDC-1801 as a major sentiment booster for investors, with the potential to trigger a stock re-rating.
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Research: TMT
4imprint’s FY22 results are impressive, with 45% organic revenue growth and an uplift in operating margin to 9.0% (FY21: 3.9%) despite some gross margin pressure from inflation. Much of this is due to the step-change in marketing efficiency via investment in the 4imprint brand, which has delivered large numbers of new customers and higher order counts. The group is inherently highly cash generative, and we already assumed that a special dividend was likely. This is now confirmed, at twice the level we anticipated, at $2/share. The pace of growth will likely moderate this year and there will need to be some investment to cater for the larger volumes, but momentum remains good, and our forecasts are edged ahead.
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