Member Info for RMM3383

A strong response to the debacle that is the MHRA has, I believe, put us in a position that is revealing the strategic play. All hands now pushing ahead with 1801 in Oz and real positivity that it’s going to happen. John R being cagey about 1802. 737? No one’s revealing exactly who is involved in negotiations or the stage they are at. So, my view (FWIW) is that the BoD will take 1801 into the clinic and it will race through the safety tests. Meanwhile I think we’ll have a partner for 737 by the summer who will pick up the tab for the next round of trials. This starts to make SAR look very attractive to two sets of acquirers or one with deep pockets. As soon as 1801 gets past P1a the price starts to go up. With 1802 I don’t believe we’ll even get close to the clinic before the licence is either snapped up or the company goes to an acquirer looking to strengthen their cancer portfolio with both 1802 and 737. 1801 with its focus on Psoriasis and potentially Lupus will go to a pharma looking to enter this market or underpin an existing drug. Get 1801 into trials in Q2 and get 737 back into the clinic and as a company SAR is a very different proposition. Much to get excited about! GLA

Hello Krone. SAR have gone for a CTN according to the RNS. To process this takes 5-7 working days according to the TGA website:
https://www.tga.gov.au/clinical-trials#ctn-scheme
Page down and there is a FAQ heading that says 'How long will it take for the TGA to process a CTN'
I'm allowing a bit of leeway because I think its unrealistic to expect a response by next Wednesday when we have the Investor Meet session. But who knows...

Only a week to wait for the interims.... News on 737? Q2 beginning to look increasingly busy.

They clearly pursued the Australian angle in parallel with waiting on the MHRA. After 3 months the MHRA have not responded so the trials go to Australia. Sensible commercial backup plan.

It's phase 1b in 2024. Phase 1a will start 'as soon as possible'. Get toxicity resolved at various levels, assess the data, then back into the clinic. Meanwhile keep potential licencing partners in the loop - the SAR business model is to licence pre or early clinical Not sure why people think the timing is disappointing. As I said earlier, 'game on' which it wasn't in December thanks to the MHRA - who did not reject it but passed the buck.

Excellent move by the BoD - The Australian scheme is rapid. CTN approval can be as quick as 7 days while the longer CTA approval is only 30 days. Q2 in this instance means April if the deadlines are met. CRO's are clearly in place. The BoD have clearly not sat on their posteriors whereas the MHRA have. The latter need to be called out for a total commercial failure. Game on. GLA

Yesterday the Independent came up with a headline that caught my attention given that we can't be far off the clinic with 1801 and subsequently 1802. - 'A whole new weapon against prostate cancer....'
https://www.independent.co.uk/news/science/prostate-cancer-new-treatment-enzyme-b2296260.html
The thing that really caught my eye was the statement - 'the study has not yet yielded a drug to combat prostate cancer'. Time for SAR to get on the PR bandwagon because the 'new weapon' is all about lipid metabolism, something that a TYK2 inhibitor has an impact on. Searching around I then came upon a Fierce Biotech article that looked at TYK2 inhibitors and the pipeline for this class of drug that promises efficacy without the side effects of current drugs. For some reason I've lost the link but it listed all the TYK2 inhibitors under development..... apart from the one being developed by SAR. Time to put our head above the parapet and get some visibility. The good old BEEB as usual are behind the curve with the news (old) that there is now a reliable non-invasive test for detecting prostate cancer. Good news but a cure is even better news. Now, if I was at SAR I'd be onto the BEEB telling them about our pipeline and mentioning the brakes that the MHRA have put on clinical trials. The story fits the media profile perfectly - 'British company with ground breaking drug stymied by political bureaucracy'. What more could a journalist ask for..... GLA

Hi HBD. Forgive my cynicism but the only thing that interests a politician is votes. Covid gave politicians worldwide a mandate to look good by throwing public money at a high visibility pandemic that badly affected the developed worlds economy. In the US the total number of deaths from Covid has now reached 1.106m . Over the same period 2.091m Americans died of heart disease. Tackling heart disease or cancer is not the high profile vote winner that Covid was nor, as you rightly point out, does it impact the economy in the same way. A pensioner with heart disease is a low priority compared to a tax paying worker suffering from a virus. This little rant also explains why on a ballot paper in the UK I want the box for 'None of the above'.
PS As I will be receiving my state pension in 3 months time I am acutely aware that my value in the eyes of a politician is rapidly approaching nil, even if I will be paying tax on my investments outside the ISA........

Part 2...

1801 – We appear to be stymied by regulation, politics and global bureaucracy. From what I understand about the reasons why we couldn’t put 1801 into a UK clinic it appears that there’s no scientific rationale for the stand off but simply a box ticking organisation has chosen to block progress for reasons that can only be political. Looking back at how governments approved Covid trials and vaccines beggar’s belief as to why they now block trials with potentially bigger long term benefits (I have my own views as to what may emerge long term on the consequences of the Covid vaccine decisions. Meanwhile the big killers – heart disease, cancers etc are subject to ‘stringent’ decisions that the Covid vaccines side stepped. Politics and economics rule). This leaves the BoD with no option other than to look beyond the UK and EU (following Brexit the EU are hardly going to make life easy for a UK company) for somewhere to conduct the trials. Fortunately there are plenty of options. My expectation is that the BoD have not sat on their butts waiting for the MHRA to complete their navel gazing but have looked to territories with more pragmatic yet equally valid regulatory processes that should 1801 prove effective then the route to market will be as rapid as if the trials had been in the UK. On that basis I’d expect an update in March/April purely driven by the fact that it seems to take at least 3 months to get anything done, anywhere. Even considering that what JR and co actually put together for the UK application will no doubt have accelerated the process, we are still at the mercy of the recipient country’s regulations in terms of a yeay or nay to progress into the clinic. On a positive note I firmly believe that someone, somewhere will let us get on with it.

So in conclusion I expect the first news to be in February re 737, then March/April for 1801 followed by further news on 737 mid year. 28p in old money is still on the cards and as soon as 1801 hits the clinic I’ll be looking for some hints as to what 1802 will be targeted at. About 4 years ago someone (not me or Thoth) touted that 2021 would be the year it would all come together, then the pandemic hit. FWIW I’m thinking that 2023 is the new 2021. Once 737 is re-licenced, 1801 is in the clinic and we know what indication 1802 will initially go up against then I’ll re-work my valuations. In the meantime there’s a G&T waiting….

GLA and all the usual caveats!

Hi Krone. I’m currently away for a few days enjoying the Cornish sunshine, beer and seafood with ample time to mull over what I think might happen in the next 6 months. Apologies for the length of this post but here goes. #

The AGM was a bit of a watershed for me. I thought the BoD were open and as forthcoming as they could be. We remain at the mercy of bigger players, politicians and market appetite. My thinking for what its worth goes something like this…

737 – Clearly GSK don’t want to progress it, neither do they want it to become a competitor therefore hang on to it for as long as possible and give it back in kit form. JR was very clear in December that dependent on how the data came back that would determine how long before they could look to develop it. My expectation is that the data has come back piecemeal and its taking time to process and re-package it. However, I wouldn’t be surprised if we don’t get an update by the end of Feb. In terms of developing it I’m thinking along the lines of if we can’t buy it out of CPF (my preferred option) then a re-licence may well be the best option. I’m also not forgetting that we remain a minority shareholder in the IP and this in itself is not insignificant. Initially I hoped for a re-licence with a big pharma with deep pockets but thinking this through there is the danger that we lose even more control over the IP. 737 only works effectively in combo and any trial with an already commercialised drug (such as Keytruda) is going to come with some big legal caveats, which we may well not like, the MM’s would penalise and the HNWI’s would baulk at. Alternatively we partner with someone whose success is as dependent on 737 as ours is with their product. I would not be surprised if the Chairman’s trip to the US in January opened a few doors but what we need now is the data packaged in a way to not only keep those doors open but to start the DD process. So, news by the end of Feb then DD for 3 months with potential partners, deal announced in June. It’s a reasonable timeline IMO.

Part 2 next....

Having now thawed out from my trip to the AGM I'd just like to put to bed the issue of the MHRA passing the buck to the UK GLP. John Reader was very clear during the AGM and when I spoke with him after the meeting. Data is not the issue. SAR have given them everything they need. The MHRA have referred the application to the GLP to review the labs and the processes they undertook not the data. As already stated the labs used by SAR were correctly certificated when the experiments were conducted. However, the MHRA have decided in their wisdom that the processes used now need to be reviewed (I suspect that some of them took place outside the UK). As Dr Parker pointed out, the MHRA are in a state of flux and understaffed thus hardly surprising that rather than approve the application they have passed the buck to the GLP (politics at play here). Quite wisely (IMO) SAR have decided to work with the GLP and also explore options beyond the UK in parallel. Whichever path delivers first will get the trials. However, I would also point out that the options outside of the UK are not in territories of questionable status. Wherever, the trials take place they will be with bona fide institutions. The sad thing is that for the sake of political bureaucracy the UK may well lose the opportunity to see a significant drug go through trials that UK residents could benefit from.
With regard to 737 it was very clear that this drug is not dead and buried. What TM and JR do not know yet is the data they are going to get in January. If its specific about genetic targeting then we could see progress to next steps emerge in January. If on the other hand work needs to be done on the dataset then the timeline is more likely February. Personally I will go with the latter, not because I think Sierra/GSK will short change us but nothing is ever straightforward where clinical data is concerned. What was very clear is that we will no longer be a passenger on this journey.
Competitive Threats - some good questions were asked about other TYK2 compounds and whether we are late to the party. From my perspective the market is certainly big enough for more than one drug. Also bear in mind that the competition also have patents, as we do, which means that the competition is different from 1801/2. If efficacy is proven then the issue focuses on toxicity and side effects and if the pre-clinical data of 1801 is confirmed in a P1 then the goal posts move in our favour.
Outlook: My biggest complaint regarding SAR is that progress has been pedestrian. However, 2023 is now looking very promising. The BoD have also taken on the point, as made by PCS, that they have got to up their game in terms of investor relations. With the new appointment in this area I'm hoping that they will live up to their promise. Q1 of 2023 is going to be very revealing as to whether we have more than 1 potential blockbuster in our pipeline. GLA

Hello Krone. I think it would be an excellent fit and I wouldn't be surprised if such a combo wasn't being explored. I half expected Sierra to announce such a combo before they got taken out by GSK.

Interesting interview with Dr Rossanese from ICR on a new approach to treating cancers. Her approach as a drug discovery expert is that new drugs will take at least 10 yrs to get into circulation but that much can be done with better targeting and combos that reduce dosage levels so that resistance/side effects are minimised. Bearing in mind that 737 worked very well with LDG I can't see this as being anything other than good news for us. The angle that seems to be missing is the use of AI for more effective targeting. Once we get 737 back, and assuming that 1802 goes into the clinic then we need to keep an eye out for a company that has the ability to target therapeutics... strangely Dr Rossanese uses jargon in her interview that is very similar to that used by Roche. Having listened in to Roche's webcasts in the past I think there's more than a passing possibility that Roche could be a potential partner for us in the future.

Just spotted that we have a new Head of IR in the form of Alex Harrison. Interesting move. Strong background in healthcare so clearly the BoD are looking to raise the profile of the company. As to the date of the AGM, I suspect that the Annual Report was printed before the rail strike was announced. Doesn't mean we can't ask questions or vote. On the plus side I'll be having a decent cup of coffee while listening in instead of some concoction out of a flask!

Hello CoL - I'm not surprised that GSK have expressed their intention to return 737. Knowing them of old they operate in silos, are very secretive and don't internally share information. Therefore any value in acquiring Sierra beyond Momo probably never got the attention it deserved. I see that as very much to our advantage.
Also as you rightly point out anyone invested in SAR needs to have a lot of faith but if you dyor then the risk/benefit is very attractive given what is in the pipeline and that we only need one success to bring a significant return.
As to the 'stellar outcome' I'd go with anything north of £10 which with what we have and the stage we are at would be a sensible price. However, if things develop in 2023 then the price could be a lot higher. Just my opinion. If that's interpreted as ramping then I'd be happy to see other peoples opinion supported by their calculations.

Interesting RNS in terms of potential value of 737. The 4 conditions mentioned in combination with LDG (Cervical, Rectal, Ovarian and SCLC) have a projected global market by 2027 of $53bn. Gemcitabine currently has a market share of 2.45% which 737 should equal if commercialised (it could even exceed this as it will work in combo with other drugs not just Gem). In terms of valuation, 737 is beginning to look low risk (safety profile is good and it has shown efficacy) which means that by the time it gets to market we could have a drug worth £3.6bn to SAR based on a fwd P/E of 15.47 (P/E’s for the sector have dropped back but could easily improve once the situation in the Ukraine is hopefully resolved). The £3.6bn is only our 27.5% share which IMHO we should look at in terms of a strategic play. If SAR was to acquire the whole of 737 and put it back into the clinic then if all goes well we are looking at a valuation of £13.1bn. Now, I’m not suggesting that we would get that because I think we would be snapped up much earlier in the process but that is just the value of 737. What is looking exciting (for me at least) is that if SAR are talking to potential partners (I noted in the RNS the use of the plural) then 2023 could be very rewarding both for 737 and 1801/2. I regard the latter’s CTA problem as a bureaucratic delay and continue to keep the faith. With the AGM on the horizon what would really excite me would be the declared intent to gain 100% control of 737 asap. GLA

Hi Krone. I'm currently digesting the bigger picture away from SAR but happy to give a response when I've got my thoughts in order. My initial view is that this is a hiccup (the CTA) and the BoD have been misled as to which hoop they have to jump through. John Reader will have put the application together and I hold him in high esteem. The consultants I can't given an opinion on. As to the fickle nature of the governing authorities I can only say that my experience of them is less than wholesome! What intrigues me and its where I'm spending some time, is looking at the bigger picture for targeted therapies and where a partnership could be advantageous. We have a delay with the CTA but (and its a big but) should the economic and political winds change in the Ukraine and China then the delay might actually have played into our hands. The world of M&A does not like political uncertainty and we've got it big time at the moment. Currently sitting on my hands but I'm playing the middle to long game with SAR. For the record, my old valuations probably need a re-visit as the risk factors have taken on new dimensions. GLA

… hit done too early. GLA and don’t lose the plot. SAR is not a one trick pony. Let the MMs play their games. For which I thank them for the opportunity to load up at a discount!

For anyone who has ever worked for a large corporate the decision by GSK to hand back 737 will come as no surprise at all. They bought Momo and that’s as far as the corporate telescope sees. Now that the dust is settling I’m putting my head above the parapet and saying that today was a turning point. We now have the opportunity to control our
destiny. 1801/2 and Flt3 are all ours. Let’s grasp the opportunity to take all of 737. Without CRUK and Sierra/GSK and all their internal politics there’s a real opportunity to put a drug back into the clinic that will have a real therapeutic benefit for a significant number of people worldwide.6

HI HBD,

Definitely two RNS's. One of my criticisms of SAR is that they put too much into updates and important points get missed. Put two important pieces of news into one RNS and one will dominate at the expense of the other. Also the MM's, bless them, cannot cope with more than one headline at a time. One headline produces one knee jerk but two headlines would produce two knee jerks and they'd fall over....