RE: SFX 018 Feb 2021 07:07
Evgen Pharma raised £10m with up to £1.0m possible through an Open Offer to
fund/progress SFX-01 to key valuation inflection points that will provide a cash
runway until at least mid-2023.
LifeArc’s selection of SFX-01 and funding of a 300- patient Phase II/III trial in Acute Respiratory Distress Syndrome (ARDS), including COVID-19 patients, is a significant endorsement of SFX-01’s potential value, with near-term interim safety and futility data analysis expected in Q2 2021.
Additionally, Evgen should have potentially three Phase II-ready programmes by
year-end 2021, a platform technology that can translate into further investigatorled studies and a royalty stream from the application of Sulforadex as a delivery vehicle in non-pharma applications (up to $10.5m milestones plus royalties).
With this number of shots on goal, any one of which would be significant, we increase our SOTP rNPV-based target price to 29p with a bear/bull scenario of 15-52p.
Placing raised £10m with Open Offer (up to £1m) by way of the issue of up to 137.5m
shares at 8p, representing 50.0% of the enlarged equity.
Net funds will be used for
(i) additional preclinical studies,
(ii) a glioma clinical trial,
(iii) formulation and scale-up manufacturing for SFX-01 and
(iv) work to file an IND for SFX-01 in the US.
This will provide a cash runway to mid-2023 and through multiple valuation inflection points.
Novel molecule that has been shown to directly modulate at least three unrelated
mechanistic targets; Nrf2, STAT3 and more recently SHP2, resulting in Evgen targeting four diseases in cancer and inflammation, all with high unmet clinical needs.
Acute Respiratory Distress Syndrome (ARDS) +/- COVID-19. An interim safety/futility
analysis for the Phase II/III STAR trial is expected in Q2 2021, based on the first 100 patients, 89 of whom are enrolled. This should be a meaningful valuation inflection point.
Pre-clinical data updates in H1 2021 should provide the clarity for Evgen’s positioning of SFX-01 in breast cancer (eg. CDK4/6 resistant tumours), glioma (brain cancer) and a third undisclosed oncology indication and the evidence to partners for monetisation events.
Not without risk, but multiple shots on goal provide investors substantial upside
potential, given the number of opportunities that exist for monetising SFX-01 and
Sulforadex.
Average licence deal values within the areas of focus have generated upfront
payments and milestones of $11-35m and up to $325m, respectively, in addition to longterm royalty streams.
Forecasts and valuation. We introduce new forecasts for 2021 and 2022 to reflect the costs of the CMC manufacturing scale-up activities, with year-end FY 2021 cash of c.£4.1m and a cash runway extending to year-end 2022.
We raise our SOTP rNPV target price to 29p to reflect the potential value in ARDS, Glioblastoma and Juvenescence.