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GBP83m
Sareum has announced that Sierra Oncology has decided to return the rights to the out-licensed CHK1 asset SRA737 (held in partnership with the CRT Pioneer Fund, CPF), following GlaxoSmithKline’s (GSK) $1.9bn acquisition of Sierra in July 2022. SRA737 was in-licensed by Sierra in 2016 and Sareum holds a 27.5% economic stake in the proceeds. Development work on SRA737 had been put on hold (due to funding constraints), but Sierra had recently indicated plans for renewed development as a potential combination therapy. This was before Sierra was picked up by GSK for its lead asset momelotinib (targeting myelofibrosis, a haematological cancer of the bone marrow). We see this latest development as a mild setback for Sareum given that GSK’s support could have accelerated development activity on the drug, triggering a $0.55m payment to Sareum from first patient dosing in a new clinical trial. However, it does provide Sareum and partner CPF with an opportunity to actively assess future development plans for SRA737, leveraging the positive clinical data.
Sareum Holdings |
Sierra Oncology returns rights to SRA737 |
Pipeline update |
Pharma and biotech |
12 October 2022 |
Share price performance
Business description
Analysts
Sareum Holdings is a research client of Edison Investment Research Limited |
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Sareum has announced that Sierra Oncology has decided to return the rights to the out-licensed CHK1 asset SRA737 (held in partnership with the CRT Pioneer Fund, CPF), following GlaxoSmithKline’s (GSK) $1.9bn acquisition of Sierra in July 2022. SRA737 was in-licensed by Sierra in 2016 and Sareum holds a 27.5% economic stake in the proceeds. Development work on SRA737 had been put on hold (due to funding constraints), but Sierra had recently indicated plans for renewed development as a potential combination therapy. This was before Sierra was picked up by GSK for its lead asset momelotinib (targeting myelofibrosis, a haematological cancer of the bone marrow). We see this latest development as a mild setback for Sareum given that GSK’s support could have accelerated development activity on the drug, triggering a $0.55m payment to Sareum from first patient dosing in a new clinical trial. However, it does provide Sareum and partner CPF with an opportunity to actively assess future development plans for SRA737, leveraging the positive clinical data.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/18 |
0.0 |
(1.5) |
(0.06) |
0.0 |
N/A |
N/A |
06/19 |
0.0 |
(1.5) |
(0.05) |
0.0 |
N/A |
N/A |
06/20 |
0.04 |
(1.0) |
(0.03) |
0.0 |
N/A |
N/A |
06/21 |
0.0 |
(1.5) |
(0.05) |
0.0 |
N/A |
N/A |
Source: Company data
SRA737 is a clinical-stage (Phase I/II) oral checkpoint kinase 1 (CHK1) inhibitor targeting the DNA damage response network for treatment of solid tumours. Developed in collaboration with the Institute of Cancer Research and the CPF, SRA737 was subsequently out-licensed by the CPF to Sierra Oncology in 2016 for up to $328.5m in milestone payments (subsequently reduced to $290m). Sareum remains a passive partner in the programme with a 27.5% stake in future out-license fees and has received a total of $2.5m in upfront and milestone payments from Sierra for its stake in the deal. SRA737 had completed two Phase I/II trials, as monotherapy and as adjunct to low-dose gemcitabine, with encouraging headline data, before being deprioritised by Sierra. In late 2021, Sierra had indicated revived interest in developing SRA737 as a potential combination therapy (in both haematological malignancies and solid tumours) following its in-licensing of the BET inhibitor AZD5153 (now known as SRA515) from AstraZeneca (August 2021). As per our understanding, Sierra was in the process of finalising trial designs for the three possible studies assessing SRA737 as a combination treatment, before receiving the offer from GSK.
The key driver for GSK’s acquisition of Sierra was its drug momelotinib for the treatment of myelofibrosis, which reported positive Phase III results in January 2022. The fate of the other two pipeline assets, including SRA737, had been uncertain, although we had held on to the possibility of GSK continuing to develop the pipeline given the parallels with GSK’s oncology/haematology focus. Nevertheless, we believe that the development provides Sareum and the CPF with an opportunity to push ahead with the development plans for SRA737, leveraging the positive clinical data from the two clinical trials by Sierra.
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Mendus has announced it will receive a final payment of €1.69m (SEK18m) as part of the Horizon 2020-funded AML-VACCiN project. This EU-funded initiative has provided Mendus with a total of €6.0m since 2020, specifically to aid the development of its dendritic cell-based vaccine, DCP-001 as acute myeloid leukaemia (AML) maintenance therapy. Important median relapse-free survival (RFS) and overall survival (OS) data from the Phase II ADVANCE II trial of DCP-001 in this setting are expected in Q422, and management notes the study has been directly funded by AML-VACCiN grants. We continue to see this data readout as a major near-term catalyst for Mendus, as it will begin to clarify DCP-001’s place in the AML maintenance therapy landscape. Our estimates are unchanged and we will adjust them when the AML-VACCiN funds hit the company’s books. Our valuation of Mendus is unchanged at SEK1.87bn or SEK9.35 per share.
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