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Sareum Holdings – Key ‘737 data coming up

Sareum Holdings - TYKing the boxes

Sareum’s investment case stands on two pillars: the development by licensee Sierra Oncology of the Chk1 inhibitor, SRA737; and the development and potential licensing of internally-generated TYK2 candidates for autoimmune disease and cancer.

This year should see the first clinical data on SRA737, as well as further data from preclinical studies, that may support a valuation uplift. Preclinical data on SRA737 in combination with low-dose gemcitabine and an anti-PD1 antibody in small cell lung cancer are due at AACR (29 March-3 April) and have the potential to surprise to the upside. Early clinical data on SRA737, and potentially on the competitor, prexasertib, are expected at ASCO, about two months later (abstracts revealed 15 May).

Several other developments have affected the investment case, most notably the proposed acquisition of Celgene by Bristol-Myers Squibb. BMS has featured its lead TYK2i prominently in presentations supporting the deal, which has increased attention on the drug class. Moreover, the acquisition, if completed, will also almost certainly mean that Celgene will not be able to exercise its option over Nimbus Therapeutics’ competing TYK2i.

Marten & Co values Sareum’s 27.5% economic interest in SRA737 at £20.3m and places an indicative value on its TYK2 assets of £8-16m, representing a modest upgrade from its previous position. This suggests an overall value for Sareum of £25-35m (0.87-1.14p/share), which offers up to 63% upside to the current share price.

190321 SAR Update MC

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