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Research: Healthcare
Sareum Holdings’ co-development partner CRT Pioneer Fund (CPF) has signed a new licensing agreement with an unnamed US-based private biopharma company for SRA737, its Phase II stage CHK1 inhibitor targeting the DDR network for the treatment of solid tumours. Deal terms include an upfront payment of $0.5m, additional fees of up to $1m in cash and 500,000 shares of the partner and potential milestone payments of up to $289m (comparable to the $290m allocated under its revised deal with Sierra Oncology in 2020, that has since been terminated). CPF will also be entitled to tiered high single-digit royalties on net sales. Sareum remains a passive partner in the programme with a 27.5% economic stake in SRA737, translating to $137.5k in upfront and a proportionate share of future payments. Given Sareum’s focus on progressing its lead clinical candidate SDC-1801 (Phase Ia trials ongoing), we expect any additional funds to be deployed in the asset’s development. We expect full safety data from the Phase Ia trial (expected H1 CY24) to be the next catalyst for the company.
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Sareum Holdings |
SRA737 – new partnership to kick off the year
Pharma and biotech |
Spotlight - Flash
3 January 2024 |
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Sareum Holdings is a research client of Edison Investment Research Limited |
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Sareum Holdings’ co-development partner CRT Pioneer Fund (CPF) has signed a new licensing agreement with an unnamed US-based private biopharma company for SRA737, its Phase II stage CHK1 inhibitor targeting the DDR network for the treatment of solid tumours. Deal terms include an upfront payment of $0.5m, additional fees of up to $1m in cash and 500,000 shares of the partner and potential milestone payments of up to $289m (comparable to the $290m allocated under its revised deal with Sierra Oncology in 2020, that has since been terminated). CPF will also be entitled to tiered high single-digit royalties on net sales. Sareum remains a passive partner in the programme with a 27.5% economic stake in SRA737, translating to $137.5k in upfront and a proportionate share of future payments. Given Sareum’s focus on progressing its lead clinical candidate SDC-1801 (Phase Ia trials ongoing), we expect any additional funds to be deployed in the asset’s development. We expect full safety data from the Phase Ia trial (expected H1 CY24) to be the next catalyst for the company.
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Source: Company data. Note: *EPS figures have been adjusted retrospectively for the 50:1 share consolidation in March 2022. |
SRA737 is a highly selective checkpoint kinase 1 (CHK1) inhibitor targeting the DNA damage response (DDR) network for the treatment of solid tumours. Checkpoint kinases are key regulators of DNA damage (such as that caused by chemotherapy) and find broad applicability across tumour types, particularly tumours with specific defects. The best known programme in this category is Eli Lilly/Esperas Pharma’s Phase II asset, ESP-001 (LY2880070) being developed for solid cancers, including ovarian, breast, pancreatic and colorectal cancer.
SRA737’s development journey had been hit by roadblocks, despite early efficacy signals. Initially out-licensed to Sierra Oncology in September 2016 (which completed two Phase I/II trials, as monotherapy and as an adjunct to low-dose gemcitabine, with encouraging headline data), development was subsequently deprioritised. Following GSK’s acquisition of Sierra in July 2022, SRA737’s rights were returned to CPF in January 2023. This new deal aims to revive development work on the asset and we note that the financial specifications remain comparable to the earlier deal dynamics with Sierra (revised in November 2020) indicating continued confidence in the asset. Sareum will be entitled to 27.5% of the deal economics, translating to $137.5k in upfront payment, which we expect to support continued development of the lead asset, the TYK2/JAK1 inhibitor, SDC-1801. Full safety data from the ongoing Phase Ia study are expected in H124 which, if positive, will be followed by a Phase Ib study in psoriasis patients (target completion end-CY24). Sareum expects to be funded to this milestone given the £5m equity prepayment facility and its expected upcoming tax credit of £1.6m.
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Research: Healthcare
Sequana Medical announced in late December that it has submitted a Premarket Approval (PMA) application to the US FDA regarding its alfapump device for use in patients with recurrent and refractory ascites (RRA), meeting its guidance for a submission in Q423. This marks a critical milestone for the company and we expect an FDA decision in H224. Given robust primary efficacy data from the POSEIDON North American pivotal study, as well as favourable safety and efficacy trends maintained at 12 months post-implantation, we are confident that there is a high likelihood of a positive outcome and commercial approval of the product. We believe US approval would mark a pivotal shift in Sequana’s commercial profile, given the strong market need for improved treatments for RRA that can boost patient quality-of-life (QoL), particularly in light of rising prevalence of non-alcoholic steatohepatitis.