Member Info for RMM3383

Shepster - I will!

Hello Krone – I’m still here but not spending much time reading the BB as I’m more interested in events impacting the market generally. Speaking to various colleagues, the City has plenty of money to spend but is being cautious given global politics. My view, FWIW, is that the 737 deal is progressing slowly as I suspect it’s taking time for the licencing party to raise the funds. I don’t think the licence will go to a big pharma as if this was the case it would have been announced a while ago so I’m expecting a smallish upfront with the milestones back end loaded. That’s not a problem for me as once 737 gets back into the clinic I think timescales could be relatively short providing we get the right combos underway. As said before, its not just the money upfront but also the savings we’ll make – there are costs to maintaining a drug and currently we’re picking up 27.5% of the bill.

As to 1801, no news = good news on toxicity. We know we’re funded to get it into P1b which is when the fun will start and so far there’s been no reason to think the P1b timescale will slip. What I’d like to hear at the AGM is that we are exploring strategic options for when 1801 licencing negotiations start. Biotechs are notoriously vulnerable to big pharma waiting them out in the hope of getting a drug on the cheap. To make sure this doesn’t happen to SAR I suspect that the BoD (most likely the Chairman) are lining up options that include ‘if you won’t pay then we’ll do it ourselves and you’ll have to pay a lot more’. The BoD are fully aware of the value we have so it’s a strategic play. While the RF deal has come in for a lot of stick it’s putting 1801 through the clinic and when Hybridan were doing the placings there was a lot of heavy discounting and dilution, not exactly dissimilar to what RF are doing. What annoys me the most is that a year ago if the s*dding MHRA had got their act together we would be in a very different position.

To end on a positive note the BoD have always tried to get some good news out before the AGM and I suspect that it may be the same this year. If not in 2023 then 2024 could start with a bang. Just my opinion of course. GLA

Hi Jerry - I seem to recall from one of the presentations a few years ago that Tim referenced 3 deals around TYK2 that were worth up to about $800m and used that to show that it was a hot sector and they were aware of the valuations. This time round he specifically referenced the BMS Takeda deal which was worth $4bn. On top of that the same slide showed sales estimates of $4bn pa and that BMS would earn £2.5bn on top of the $4bn. We may not be at the same stage as BMS but both Tim and John referred to the progress of 1801 in P1a as the drug now being significantly de-risked. On top of that Tim confirmed that they were talking to potential licencees but my take is that nothing will happen until we can show them P1b data. In essence we have to sit tight on 1801 but I suspect we will hear something on 737 much sooner. John in particular sounded quite upbeat on 737. Hope that helps.

So, funded until the end of 2024, 737 still in play, 1801 progressing as scheduled. The interesting part was Tim putting up the figures on BMS. The last time he mentioned deal values it was in the hundreds of millions. This time its in billions. Do I detect an end game? They couldn't have been more clear that licencing is the focus for 2024.

Prior to tomorrow's InvestorMeet I thought it might be worthwhile airing my views on the lack of feedback on 737. As already posted, I'm of the view that if negotiations had stalled we would have been informed by RNS by now. If things are progressing, albeit slowly, then CRT would probably say as much to SAR and that would be it..... Having worked with some of the big charities (Oxfam, RSPCA, Lifeboats etc) I'm all too familiar with how slow and cautious these people are. With CRUK we have multiple layers with CRT being a charity in its own right as part of CRUK but with their Pioneer Fund managed by Sixth Element Capital. Looking at the Sixth Element website its disappointing just how out of date the section is on CHK1 Inhibitors. Anyone reading that could only conclude that 737 was still with Sierra and the GSK deal had never taken place! My experience of working with charities has been that unless you are offering them money, they'll politely answer your first call and tell you that they'll get back to you when they have some news. With the second call they'll tell you the same and promise to get back when something transpires. The third call doesn't get answered. Then completely out of the blue they call you with news! I suspect that CRUK/CRT/6th Element are no different. Which in conclusion means as the minority stakeholder we have to wait for the call out of the blue. On that basis I'm looking to 1801 as the one drug we are in complete control of. Would be nice just to get confirmation that the trials are proceeding to schedule and without issue. GLA

....as Thoth would have put it!

Good to see the board settling down after the nonsense during September. FWIW I think the Investormeet will only confirm what we already know - 1801 is progressing to schedule and 737 is still in play (because they would have had to have told us if it wasn't as that's price sensitive). The great unknown is whether or not we get another RNS before the 11th. I get the distinct impression that 1801 is marching forward without any significant issues while 737 is stuck in negotiations that aren't helped by the general economic malaise affecting businesses worldwide. Speaking to others in the City things (as in raising money) are moving very slowly. If 737 was to be licenced to a big pharma a deal would have been struck by now so my gut feeling is that we are dealing with a smaller entity that is raising money. As long as they have the funds to get it back into the clinic I won't be concerned because even if its only a small payment upfront it means that we won't have to pay CRT our share of the maintenance costs. Before Sierra/Pronai took out the licence I seem to recall that it was costing us in the region of £200k pa just to maintain the IP etc. Getting 737 re-licenced will be helpful in reducing our outgoings hence why I strongly believe that news on 737 is price sensitive either way. Given the timing of the meeting on the 11th I think it will be as much about what they don't say as much as its about progress to date. We all know that SAR is not a leaky ship so I don't expect much SP movement until we get real news. GLA

Hi Gunner - we were made aware at the last AGM that there were approaches by at least two parties to take on 737 and if I recall correctly the last we heard on this matter was that the 'conversations' were ongoing. Depending on how those conversations are going and bearing in mind that we are a minority shareholder and not at the negotiating table (as Stephen Parker has repeated on a number of occasions) then Clive Birch will not have privileged information and can therefore buy shares. However, if CRT have failed to do a deal they would have needed to inform SAR and hence us. Just my opinion and I'll leave it there.

Andy, quite agree. The size of the buy is irrelevant. They just sent us a little message but for some people its never enough. Reminds me of the scenario played out by certain political commentators - The Prime Minister ' I'm pleased to announce an infinite increase in the NHS budget'. Leader of the Opposition - 'Its not enough! We need more!!'. As to 737, if a deal was dead they would have had to tell us.

Hello Potnak and thanks for your balanced post. I'm currently sat here with a pot of money waiting for the much vaunted 30p I will be able to buy at ...... and yet the SP seems to be going in the wrong direction? Buying a few yesterday was clearly a good move. I'm slightly at variance with your assessment in three respects. I don't think we are in negotiation for a licence on 1801. Having got to this stage I believe the pharmas will simply have said 'come back to us when you have some data.' With regard to 737, if it was back on the shelf that would mean the two interested parties would have had to have pulled out which would be a price sensitive change and required a RNS. On that basis it's still in play. Finally I do believe we have a weak link in the executive team but in my opinion its not Parker. He brought in the HNWI's and without his work on raising funds we'd never have got 1801 into the clinic. The forthcoming trading update is what I'm waiting for in terms of managing the risk and where we really are with 1801. We're only 4 months away from the AGM and I suspect the BoD will soon want to present some good news to rally the SP and make for a happy meeting. GLALTH's

Interesting RNS from my perspective. Its unlike SAR to proffer some advance news (on 1801 and positive at that). Tim doesn’t normally put his head above the parapet without rock solid evidence to support his comments. The real news comes in a few weeks’ time when we get the trading update. In the meantime they’ve taken out an insurance policy to guarantee getting 1801 through the clinic. Why do this now? Given where the SP is and the current risk attached to the trials I wouldn’t raise money via a placing unless I really had to. The discount would need to be huge. However, get through Phase 1a and risk starts to decline. Add 737 into the equation (assuming good news and we’ve yet to be told otherwise) and you have a very different story to put to investors. Riverfort and their CLN’s can be bought out early although there’s a penalty clause of 4.5% from what I can see on first viewing of the agreement. Furthermore this is a drawdown facility, they don’t have to use it all and as Tim states the £5m is ‘if fully drawn’. At the moment it’s just £2m and the balance would get us to Q4 2024 which is a decent runway and leaves plenty of wriggle room to bring in other investment. In Tim’s position I’d get through P1a, bank some money when 737 gets re-licenced and then look for further investment that will buy off Riverfort and secure the business through P1b for 1801 and P1a for 1802. After that its game on. Just my opinion of course…..

Spot on HBD! The lawyers will use every opportunity to stretch out the pay cheque!! Also bear in mind that we are entering the holiday month which probably means double time.....

Hi Krone. For me the key element of any deal on 737 is what the combo is going to be. Or maybe combos? I can see this being a sticking point that the lawyers who will use it to wring out the cash machine. What I'd like to see is evidence that the new partner(s) can see the trials through and that we're being combined with other drugs that have mileage/potential in big indications. A smallish upfront with big milestones and a suitable royalty would be very attractive if we were partnered with a commercially successful drug or went up against an indication with fast track potential and wider applications. Whilst the MM's would only allow us a tentative gain due to the small upfront, rapid progress through the clinic and the prospect of commercialisation would change the game entirely both for Sareum's SP and the pipeline. I'm waiting on news because if negotiations have floundered then we would have heard.

Hi Krone. Difficult to call at the moment as from my POV we’re in a bit of a no man’s land – awaiting an update on 1801, long term funding, market anxiety etc etc. I’ve actually spent more time recently looking at hydrogen and battery technology so forgive my limited perspective. The joker in the pack remains 737 as I see that as one element of the Sareum pipeline that could provide a result completely out of the blue. The positives are that so far there’s been no bad news on the trial, 737 is still in play and the sector remains of interest to acquiring/licencing parties. On the downside we have the inevitable slide due to lack of (good) news, global economics /politics etc. What I’m pondering is whether news on 737 would be enough to re-spark interest in Sareum and make certain parties sharpen their pencils, contemplate an early strike and put us all out of our misery! Even if there was good news on 737 tomorrow I can’t see anything that big happening before October which is interesting timing because by that time we’ll be well past early news on 1801. When Sierra were acquired the interest was 100% in Momo and 737 was ignored. If 737 is successful then I don’t believe 1801 and 1802 can be ignored and it will be a case of the pharmas playing chicken. On that basis I see the situation as a bit like dominoes and I’m waiting for the first one to fall, which if I’m correct won’t be that far away. GLA

Hello Krone,

My thoughts, FWTW…. or ‘munterings’ as Thoth would call them!

On news that we were going ahead in Oz I had expected a rise to around 140 and for it to hold. The way the SP has faded away tells me that the market is ambivalent about SAR until we announce something with money attached. Depending on what the news is, that could jump start interest but I’m now wary that simply saying we dosed the first triallist won’t cut it. Only news that increases volume and interest will shift the price irrespective of the potential for our molecules.

On that basis I’ve been taking more interest in the long term potential and a couple of articles have recently caught my attention not least was the one I read yesterday about mental illnesses (Schizophrenia in particular) and the role of the immune system in causing such conditions (which now in few instances are being correctly diagnosed and even successfully treated). This reminded me of Thoths view that 50% of illnesses were either caused/driven or exacerbated by the immune system. His assertion seemed a little high but I sit here today having been stung by a bee on Wednesday and with my right leg now completely inflamed. Having read up about the issue it would appear that with bee stings the immune system can overreact increasingly with each sting (this is my 3rd in so many years). From my limited understanding the complexity of the immune system combined with different genetic profiles makes the silver bullet approach to any medical treatments for the likes of psoriasis and lupus virtually impossible. However, I now firmly believe that we are sitting on a goldmine and the whole ‘inhibitor’ sector is being watched like a hawk to see who will come up with the first step change in treatment. Much as I fear it, the use of AI to identify and correctly diagnose patients will lead to better targeted combos that prove far more effective than the regimes currently employed. The fact that with 1801 we are looking at psoriasis is a major win for us assuming tox isn’t a problem. Get us into a position with the data that potential acquirers clearly want and with some other success in the sector and its almost blank cheque time.

More immediately I’m hoping that news on 737 is not far away. As previously said, any news with money attached will bump start the SP but more importantly, as with 1801, I want to see what any licensee intends to put us up against.

In the meantime there’s plenty of sunshine to be enjoyed!

GLA

Good to see that we’re being kept informed of progress. Could this be a new PR strategy!!

Hats off to the BoD for getting a RNS out so rapidly. Given the time differences involved the news must have come in overnight and they've pushed this out in record time. Plenty for people, HNWI's and institutions to digest over the extended weekend. GLA

Hello Krone, I hope you are well too. My valuations for SAR are currently fraught with caveats but here's where I'm currently at:
1801: The market is going to be cautious given the MHRA’s debacle of a performance last year. On reflection I think the MM’s and the market will respond positively to a successful application with a rise to £1.7-1.8. Depending on how rapidly we go into the clinic will determine if this falls back a bit but my expectation is that recruitment and dosing will follow rapidly and we’ll break £2. Then we wait for results! However, that then opens the window for 737.
737: We know there is interest. Two (or maybe more now) companies have expressed interest and the sector is looking attractive. What IMO will really boost the SP will be any upfront payment. Even the 50k we got for FLT3 doubled the SP (albeit from a low point) so with anything north of £500k we should see a 100% uplift in the SP assuming the partner goes for a high worth indication. That IMO would take us over £4.
1801 & 1802: In the second half of 2023 and assuming positive feedback from 1801’s trial then things start to look very attractive. With 1801 up against psoriasis (market size currently $11.13bn) and 1802 going for say, prostate or pancreatic (market sizes £13.1bn and 3.62bn respectively) then I’d expect a SP heading towards £7. Add 737 into the equation (SCLC worth $12bn) and we should be somewhere between £8.5-9.
Company valuation: So, if we were successful (big ‘if’ I know) with 737, 1801 and 1802 then a TO value with a PE of 8 would take us to £68.
Reality Check: SAR’s business model is to licence pre or post pre-clinical. If they stick to this model with 1801 and 737 is licenced then I’d be very surprised if a pharma didn’t suddenly take a good look at the company. At £68 a share it would cost a pharma getting on for £4.6bn to acquire us. I think they’d be stupid to wait that long no matter how deep their pockets. Being realistic I think that as soon as 1801 gets past P1 we’ll be looking at a potential acquisition price of £16 (32p in old money) which would reflect the risk value of both 1801 and 1802. For most of us that would be a great result.
All the above IMHO and GLALTH’s and HNWI’s!

Elcap - I quite agree! It will cement the Aussie view of Brits as 'couldn't organise the proverbial in a pub'. It does make me wonder, given the bureaucratic nonsense imposed in the UK, as to why the Aussies are buying submarines from us.....

Hi Krone. I don't think its the case that they are not progressing 1802 but more a case of how much John Reader can cope with! If the MHRA hadn't stuffed up the CTA we wouldn't have lost 3+months. On top of that he now has the 737 data to plough through. At the AGM in December he stated quite clearly that it depended on what GSK sent back as to how long it would take him to assess how best to take 737 forward as a combo. In the BoD's shoes I'd prioritise 1801, then 737 and after that 1802. Its not as if we have a big team in Pampisford. I think they've done well to get this far. However, if 1801 aces P1 then I wouldn't be surprised to see someone come on board to fast track 1802. Personally I'd be surprised if both 1801 and 1802 weren't in the clinic in 2024 albeit at different stages. Just my view.

Ahfam - I go back to an AGM I attended many moons ago when Tim said 'we only need to be successful in one indication'. If 1801 passes muster then 1802 takes on a whole new dimension. What intrigues me is that John is not declaring what they would initially put 1802 up against. Two reasons for this - they will want to go for an indication where success is highly likely and secondly one that will get the attention of the big pharmas.