Sareum Holdings — New funding extends runway to Phase II

Sareum Holdings (AIM: SAR)

Last close As at 20/12/2024

GBP0.27

−0.50 (−1.82%)

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Research: Healthcare

Sareum Holdings — New funding extends runway to Phase II

Sareum Holdings has announced the completion of a £2.4m private placement and receipt of another A$1.9m (c £1m) in R&D tax credits from Australian authorities, related to the Phase I clinical trial for its lead asset SDC-1801, a next-generation TYK2/JAK1 kinase inhibitor. Management expects the combined funds to support preparatory activities, including longer-term toxicology studies, as the candidate advances towards Phase II trials in psoriasis patients. As a reminder, the company had presented encouraging Phase I top-line data for SDC-1801 in July 2024, and has now reported further positive insights from the unblinded data (detailed below). Based on the Phase I readout, and supported further by additional data from the planned toxicology studies, we expect Sareum to seek partnering opportunities before proceeding to Phase II, likely in 2025.

Jyoti Prakash

Written by

Jyoti Prakash

Analyst, Healthcare

Healthcare

Sareum Holdings

New funding extends runway to Phase II

Pharma and biotech

Spotlight - Flash

11 October 2024

Price

27.5p

Market cap

£28m

Share price graph

Share details

Code

SAR

Listing

AIM

Shares in issue (adjusted for the October 2024 issue)

119.8m

Gross cash at 31 December 2023 (excluding proceeds from post-period equity raises and warrants exercise)

£0.4m

Business description

Sareum Holdings is a UK-based drug development company, specialising in small molecule kinase inhibitors. Its lead programmes are TYK2/JAK1 inhibitors, SDC-1801 for autoimmune diseases and SDC-1802 for cancer. Sareum initiated clinical trials for SDC-1801 in Australia in May 2023 (Phase Ia), with positive top-line data reported in July 2024. Other programmes include the CHK1 inhibitor SRA737, which was out-licensed to an unnamed private US-based pharma company by co-development partner CRT Pioneer Fund LP in January 2024.

Analysts

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

Sareum Holdings is a research client of Edison Investment Research Limited

Sareum Holdings has announced the completion of a £2.4m private placement and receipt of another A$1.9m (c £1m) in R&D tax credits from Australian authorities, related to the Phase I clinical trial for its lead asset SDC-1801, a next-generation TYK2/JAK1 kinase inhibitor. Management expects the combined funds to support preparatory activities, including longer-term toxicology studies, as the candidate advances towards Phase II trials in psoriasis patients. As a reminder, the company had presented encouraging Phase I top-line data for SDC-1801 in July 2024, and has now reported further positive insights from the unblinded data (detailed below). Based on the Phase I readout, and supported further by additional data from the planned toxicology studies, we expect Sareum to seek partnering opportunities before proceeding to Phase II, likely in 2025.

Historical financials

Year
end

Revenue
(£m)

PBT
(£m)

EPS
(p)

DPS
(p)

P/E
(x)

Yield
(%)

06/21

0.00

(1.7)

(2.3)

0.0

N/A

N/A

06/22

0.00

(2.6)

(3.2)

0.0

N/A

N/A

06/23

0.00

(4.0)

(4.7)

0.0

N/A

N/A

Source: Company data

The £2.4m funding was executed through a private placement to institutions and certain high-net-worth individuals against an issue of 11.8m new shares at a subscription price of 20p/share (c 27% discount to the last trading price of 27.5p). We note that each subscriber to the issue will also be entitled to one warrant per share subscribed (five-year maturity period), with an exercise price of 20p. In case of a subsequent equity raise by the company at a lower issue price, the conversion price for the unexercised warrants will be rebased downwards. In addition, Sareum reported receipt of A$1.9m (c £1m) in R&D tax credits from Australian authorities, related to the Phase I clinical trial for SDC-1801, which took place in the country. Management expects the combined funds (c £3.4m gross) to support the company in undertaking further toxicology studies, aiming to bolster its data package to support discussions with regulators and potential licensing partners.

As a reminder, Sareum reported positive top-line data from the Phase I study in July 2024, demonstrating a desirable safety profile, blood plasma levels significantly higher than predicted therapeutic levels, and a long half-life (17–20 hours). Based on the (now available) unblinded data, management has reiterated SDC-1801’s robust safety profile (adverse events similar to placebo and no clinically significant impact on any blood component), an important consideration given the off-target toxicities associated with previous generation JAK inhibitors. Unblinded data from the multiple ascending dose cohorts also demonstrated dose-dependent reductions in three biomarkers of JAK1 and TYK2 activity, which are key mediators of major inflammatory pathways. While several TYK2 inhibitors are currently under development (Bristol Myers Squibb’s Sotyktu was approved by the FDA in 2022), Sareum asserts that the dual inhibition property of SDC-1801 potentially offers greater therapeutic potential. We will present a more detailed analysis of Sareum’s ongoing programmes following the release of the full-year results later this month.

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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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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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.

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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.

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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 2024 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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