Ryvu Therapeutics — Successful Phase I with SEL24/MEN1703

Ryvu Therapeutics (WSE: RVU)

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53.90

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Research: Healthcare

Ryvu Therapeutics — Successful Phase I with SEL24/MEN1703

In March 2020, Ryvu announced its partner Menarini Group (via subsidiary Berlin-Chemie) has successfully completed the dose-escalation part (Phase I) of the ongoing Phase I/II study with SEL24/MEN1703, a dual PIM/FLT3 kinase inhibitor in a Phase I/II trial for acute myeloid leukaemia (AML). The recommended dose for the Phase II part of the study (cohort expansion) has been established. Ryvu is a pure biotech, so the ongoing turbulence in the global markets has a limited effect on the outlook of the company in our view. Moreover, Ryvu is financed until 2021, which positions it well to weather the volatility. Our valuation is unchanged at PLN1.08bn or PLN67.4/share.

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Healthcare

Ryvu Therapeutics

Successful Phase I with SEL24/MEN1703

Company update

Pharma & biotech

23 March 2020

Price

PLN37.2

Market cap

PLN595m

Net cash (PLNm) at end-Q319

85.6

Shares in issue

16.0m

Free float

40%

Code

RVU

Primary exchange

WSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(24.1)

(18.4)

10.8

Rel (local)

7.1

16.6

75.0

52-week high/low

PLN51.2

PLN30.1

Business description

Ryvu Therapeutics is a drug discovery and development company focusing on novel small molecule therapies in oncology. The lead asset is wholly owned SEL120, a selective CDK8 inhibitor being studied in a Phase Ib clinical trial for AML and myelodysplastic syndrome that also has potential in solid tumours. SEL24/MEN1703 is a dual PIM/FLT3 kinase inhibitor licensed to the Menarini Group in a Phase I/II trial for AML. The preclinical stage pipeline includes assets in immunoncology, synthetic lethality and cancer metabolism.

Next events

SEL24 Phase I/II Part 1 data presentation

2020

SEL120 Phase I study results

2020

Preclinical data from various projects

2020

Analyst

Jonas Peciulis

+44 (0)20 3077 5728

Ryvu Therapeutics is a research client of Edison Investment Research Limited

In March 2020, Ryvu announced its partner Menarini Group (via subsidiary Berlin-Chemie) has successfully completed the dose-escalation part (Phase I) of the ongoing Phase I/II study with SEL24/MEN1703, a dual PIM/FLT3 kinase inhibitor in a Phase I/II trial for acute myeloid leukaemia (AML). The recommended dose for the Phase II part of the study (cohort expansion) has been established. Ryvu is a pure biotech, so the ongoing turbulence in the global markets has a limited effect on the outlook of the company in our view. Moreover, Ryvu is financed until 2021, which positions it well to weather the volatility. Our valuation is unchanged at PLN1.08bn or PLN67.4/share.

Revenue

(PLNm)

PBT

(PLNm)

EPS
(PLN)

DPS
(PLN)

P/E
(x)

Yield
(%)

09/18

24.2

9.2

0.33

N/A

N/A

N/A

09/19

25.8

(34.1)

(2.13)

N/A

N/A

N/A

Note: Ryvu (formerly Selvita) has published only segment financial information so far, with the Q319 report containing the first detailed accounts for 9M19 and 9M18.

Phase II with SEL24/MEN1703 ongoing

As Menarini is the sole sponsor of the ongoing Phase I/II trial, Ryvu only provided brief confirmation that Phase I part was successful, but the data should be presented at one of the upcoming conferences (not yet specified by Menarini). More importantly, the trial is progressing into Phase II, which, in addition to usual safety endpoints, will also evaluate the anti-leukaemia activity of SEL24/MEN1703, a potential key catalyst for Ryvu in the near term. Menarini has not yet guided to when it expects to finish the Phase II part of the study (we expect it will be in 2021), but in June 2019 it revealed plans to expand the trial to a larger number of centres in the US and Europe. This reassures us of Menarini’s commitment to complete the trial in a timely manner.

More to come from Ryvu’s pipeline in the near term

Another key catalyst for 2020 is Ryvu’s first clinical data with the wholly owned asset SEL120, a selective CDK8 kinase inhibitor, with interim results from the ongoing Phase Ib trial for AML and myelodysplastic syndrome. SEL120 has potential in many other cancers and Ryvu is evaluating it in other haematological malignancies, in solid tumours and in combinations with other anticancer treatments.

Valuation: PLN1.08bn or PLN67.4/share

Ryvu has been trading as a standalone company after its drug discovery services business was spun out in October 2019. Our valuation of Ryvu is unchanged at PLN1.08bn or PLN67.4/share. The last reported net cash of PLN85.6m is sufficient to fund R&D until at least 2021. The successful completion by Menarini Group of the Phase I part with SEL24/MEN1703 in AML triggered a €1.75m milestone payment to Ryvu. In addition, the company received a grant of PLN 32.8m (€7.6m) from the Polish National Centre for R&D to support the synthetic lethality programme, which further reinforces the financial position. We reviewed Ryvu’s R&D pipeline progress in more detail in our last report. As usual, we expect the company to provide an update on its pipeline in the upcoming Q419 report.

Newsflow over the next 12–18 months

In addition to the lead clinical-stage assets, Ryvu has developed a broad preclinical pipeline (Exhibit 1). The most advanced preclinical assets include a best-in-class dual A2A/B receptor antagonist, small molecule STING agonist for systemic administration, an HPK1 inhibitor and first-in-class SMARCA2 inhibitor for treating SMARCA4-mutated cancers. Ryvu also has several undisclosed projects at earlier stages and we expect these to ‘feed’ the preclinical and clinical pipeline.

Exhibit 1: Ryvu R&D pipeline

Source: Ryvu

Some of the expected catalysts for the share price over the next 12–18 months include:

SEL24/MEN1703 data from the dose-escalation part (Part 1) of the ongoing Phase I/II study (timing and conference depends on the partner and sole trial sponsor Menarini).

SEL120 interim data from the Phase Ib study (2020).

Start of IND-enabling studies in A2A/A2B project in H220.

New preclinical data publications from multiple projects, including preclinical in vivo proof-of-concept data.

Potential licensing deal for one or more of the earlier projects.

Exhibit 2: Sum-of-the-parts Ryvu valuation

Product

Launch

Peak sales
($m)

NPV
(PLNm)

NPV/share
(PLN)

Probability

rNPV
(PLNm)

rNPV/share (PLN)

Innovation

SEL24

2023

750

901.6

56.5

15%

172.3

10.8

SEL120

2025

1,500

1,782.2

111.6

15%

273.8

17.1

A2A/A2B antagonist

2030

1,000

923.7

57.8

5%

182.6

11.4

SMARCA2 inhibitor

2030

1,000

831.3

52.0

2%

166.8

10.4

STING agonist

2031

1,000

866.0

54.2

2%

183.9

11.5

Merck collaborations

2026

2,000

58.3

3.6

5%

11.8

0.7

Net cash (last reported)

100%

85.6

5.4

Valuation

5,363.0

335.8

1,076.8

67.4

Source: Edison Investment Research. Note: WACC = 12.5% for product valuations, WACC = 10% for the Services segment.

General disclaimer and copyright

This report has been commissioned by Ryvu Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Ryvu Therapeutics. Edison Investment Research standard fees are £49,500 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 2020 Edison Investment Research Limited (Edison).

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Ryvu Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Ryvu Therapeutics. Edison Investment Research standard fees are £49,500 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 2020 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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