Edison Flash Report Out14 Apr 2022 09:37
Pharma & Biotech - Mcap £218m - Price £3.2 - Flash note
Sareum Holdings:
GSK’s Sierra acquisition, read-across for Sareum
GlaxoSmithKline (GSK) has announced the acquisition of Sierra Oncology, Sareum’s licensing partner for its CHK1 asset SRA737 (held in partnership with CRT Pioneer Fund) targeting solid tumours. The deal values Sierra at $55/share (a 39% premium to the closing price on 12 April) for a total consideration of $1.9bn. As a reminder, SRA737 was in-licensed by Sierra in 2016 and Sareum holds a 27.5% stake in the proceeds of the licence agreement. Development work on SRA737 had been deprioritised (due to funding constraints) until recently, when Sierra indicated a revival in development work on a potential combination therapy. Sareum’s share price has responded favourably following news on the acquisition, suggesting that the market is expecting progress on the asset to accelerate given the significantly heftier resources at GSK’s disposal. We note that first patient dosing in any studies involving SRA737 will trigger a milestone payment of $2m (translating to $0.55m to Sareum).
Year
end
Rev
(£m)
PBT
(£m)
EPS
(p)
DPS
(p)
P/E
(x)
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
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Business description
Sareum Holdings is a UK-based drug development company, specialising in small molecule kinase inhibitors. Its lead programmes are its preclinical TYK2/JAK1 inhibitors, SDC-1801 for autoimmune diseases and SDC-1802 for cancer. SDC-1801 is completing its preclinical development with the target of filing a CTA in mid-2022. Other programmes include the CHK1 inhibitor SRA737, out-licensed to Sierra Oncology (to be acquired by GSK) and the de-prioritised FLT3+Aurora kinase. Sareum holds a 27.5% stake in the economics of the SRA737 licence agreement.
Sareum Holdings is a research client of Edison Investment Research
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