Member Info for RMM3383

Whoops! Major typo - should be 'blockbuster'......

Despite the FDA rejecting Filgotinib in the US (concerns over side effects) it has been approved in Japan with the P3 trials not supporting the concerns expressed by the FDA. Filgotinib is Gilead/Galapagos' JAK1 inhibitor and has been trialled for RA - Global Mkt Size $36bn. They are now looking at ulcerative colitis. More evidence of the class being a blackbuster.

I'm no expert in Patent Law but I do know that you file for patent protection before handing anything over to a third party. What is interesting is that the Publication Number ends in DO. This means that only the title, assignee and application number are revealed. If the product is under development then you can secure your rights with a patent application(which in this case cites a previous patent) and supply the details at a later stage - up to 18 months later. I think its just JR protecting what the outcome could be in 9 months (now 3 months) time. GLA

If 737 was of no interest to Sierra then we'd have it back by now. It didn't stop them handing back 141. As to banging the drum, I'd much rather have the milestones to 737 than a £50-100k grant for Covid. The latter will be on a parr with the Aurora payment earlier this year and that didn't lead to a re-rate. £5m in the bank will signficantly impact the SP. But that's just my preference. I'll put the drum back in the cupboard if that's what everyone wants.

Irrespective of who is in the driving seat on the contract with Sierra there is no avoiding the fact that we are due news. Sierra have recently presented at two conferences and released their Q3 2020 update. The focus at all off these events remains on Momelot. Under the leadership of NG all the eggs were put into one basket (737 and 141 sidelined). 141 has been handed back with a few caveats on royalties if it ever makes the grade while 737 remains within the Sierra portfolio, even if hidden. From a strategic perspective the focus on Momelot is not going to excite investors - a global market size of currently <$1bn which when compared with the market size of anogenital ($16bn and growing at 6.46% pa) is small. Even anal cancer on its own is as big as the Myelofibrosis market. NG pursued Momelot because it was the asset closest to commercialisation. However, the delays in getting it approved mean no headline data before the middle of 2022, assuming the trials are not significantly delayed by Covid. Meanwhile they retain an asset with an unmet need in a market with a much bigger value and which will be approaching $18bn by the time Momelot gets to market. In Stephen Dilly's shoes I would be fighting tooth and nail to keep my hands on 737. Momelot is not exciing the Sierra investors (SP down another 6% aftert yesterday's conference paper) so he needs to do something to stabilise the SP because Momelot is not going to come to his rescue for at least 2 years. Whether its Gilead or ANO I don't believe they're not talking actively to a non-diluting partner. Whatever is going on we need an update but if its NDA'd then we can but wait. What SAR/ICR et al can do is clarify the contractual terms on 737 coming back to us and the timeline. On a different tack, many thanks to Zylo for the link to the Covid grants. Good to see money well spent! £89k to the University of Plymouth to look at poets collaborating internationally on the topic. Anything less than that to SAR for a therapeutic treatment would be an insult but then the Government has put the hopeless Baroness Harding in charge of Track and Trace.... God help us. GLA all LTH's

Its looking increasingly the case that silver bullet therapies will only apply to the simplest conditions. New data released about Osimertininb (a tyrosine kinase inhibitor - AZN $12,750 per month per patient!!!) demonstrates the problem with drug resistant sclc. The drug also has significant side effects, one of which is pneumonia. In terms of treatment regimes this means that patients will need all the parts of the puzzle to address the core condition and then the conditions that arise over time (Osimertinib patients become resistant after 10 months). From a SAR point of view this adds to the value of TYK2 (which may or may not help with respiratory side effects - a key element of the Covid 19 grant application). Any pharma looking at adding to their pipeline needs to consider a very broad set of indications and how they all fit together before putting a value on the potential acquisition. It's not an easy one to resolve both for the vendor and the acquirer. SDC1801/2 already has a huge potential value but it could be worth even more than we think if the right partner emerges. And this is my point - we need the right partner/acquirer not just someone with a cheque book and an eye for a bargain. We may need to hold out for the best deal. However, I'm not talking years - if the Covid Grant gets approved and MTD is resolved then negotiations simply take on a new urgency. GLA

Hi Num4: I fully agree - If we get the milestones for 737 and Aurora then its a gun to the head of the pharmas looking at 1801/2. With money in the bank and good pre-clinical data then the option is very much to go into P1. However, any pharma looking at us should be aware that if we went this route then the price on buying in goes up exponentially.

...... I’m rapidly coming to the conclusion that the 1p barrier and PR in support of getting past it is irrelevant. When news breaks it should be tangible and substantial (essentially it will involve money). Comparisons with other players on AIM are only helpful if they are at the same stage of development, have as many irons in the fire and aren’t hindered by NDA’s. Frustrating as it might be I’m going to sit it out for the next few months as I suspect many LTH’s are and I’ll forgive Tim the lack of PR when he announces big news. However, if we don’t get substantial updates over the coming weeks then the Xmas AGM is going to be a tough one. GLA all LTH’s.

At the AGM I spoke with John Reader and the Chairman and made my views known that in my (humble) opinion an acquisition exit at the end of the pre-clinical stage for 1801/2 would be my preferred option. Going into trials was a risk we didn’t need to take nor do they have the skills to manage such trials. I accept that those skills could be bought in but that then changes the basis upon which Sareum was founded – discovery and licence at pre-clinical. An acquisition exit would deliver the much anticipated significant value to shareholders plus it would allow Tim and John to continue their research under the umbrella of someone with bigger pockets while retaining the all important academic kudos should 737, TYK2 and/or Aurora become commercial successes. On this basis I took time out last night and while walking the dog this morning to review where we might be on this journey as I strongly suspect that the Chairman is of a similar mind given his history. In order of likelihood: 737 – noteworthy moves by the new man at Sierra suggest that he’s going to broaden the pipeline. If that didn’t include 737 then I would have expected him to have handed it back by now. Should it come back to us then I’d be very surprised if ICR hadn’t already lined up someone to take it. There’s plenty of data now to take it forward. Milestones/upfronts will be due. Any negotiations, with Sierra or ANO will be under NDA. The BoD will not be able to say anything until Sierra make an announcement. No PR opportunity until then. SDC1801 is the next frontrunner and as we’ve been told the data pack is critical to any licence and as JB pointed out at the weekend the MTD (or equivalent) is a highly important part of this. We know we’re not there yet but should be at some point in Q4 2020. The Patent resolution would add value but doesn’t stop negotiations (in fact if a large pharma bought the business they would have deeper pockets and bigger legal guns to throw at the problem, especially if they bought SAR and took 1801 and 1802). We know they are talking to multiple parties so NDA’s of various descriptions must be in place – you wouldn’t exchange data without some form of protection and any pharma worth its salt would write in a clause preventing the release of their name (as the Chinese did with Aurora). No PR allowed or until a deal is struck. Then there’s Aurora. The Chinese company inserted the clause that prevented their name being disclosed. If you are a big player (and we know they are listed on the Shanghai exchange) then you would want to prevent any fall out should you be unable to resolve the solubility issue. A smaller player may well have done the opposite as it would raise their profile even if they failed. On this basis I suspect we have a major player and I also suspect we could get news before the end of the year. Again no PR opportunity for the time being. With all the above in mind ......

Important article released yesterday regarding checkpoint inhibitors and how their efficacy can be improved. Scientists from Massachusetts and Harvard have identified how certain clinical markers predict how a cancer patient will respond to immunotherapy. The relevance to us is the use of such markers in designing clinical trials. By recruiting the most responsive patients you can design a trial where the endpoint is not only met but in such a way that fast track or orphan status is a higher probability. This is important to SAR because although we are not in trials yet (for 1801/2) it does have a relevance in terms of reducing the risk factor. Any partner now has the opportunity to design a trial with a much higher degree of success and therefore the value of TYK2 goes up. Don't ask me how much by but it could change the business model for milestones whereby the argument shifts to making the payments more evenly spread rather than back end loaded. The article also reinforces how important checkpoint inhibitors are in the battle against cancer.
https://scienmag.com/markers-may-predict-patient-response-to-immune-therapy-of-cancer/
GLA

Potnak - I completely agree. Anything less than 10p would be a bad deal and 3p would be an insult. AIM enthusiasm and the breadth of the SAR pipeline says 20p+ should be on the cards. Raising on the back of 737 milestones would be a gun to the head of any pharma and acceptable if the sort of games played by J&J were underway.

Potnak - nothing wrong with your post. We need to be pragmatic. What would annoy me would be that we were offered a deal and the BoD chose to walk away without telling the shareholders and then went for a raise! Going for a raise with a view to negotiating a better deal is part and parcel of negotiating strategy if you are confident you have the goods. However, my caveat is that after the last raise we were told we had more than enough money to get 1801 and 1802 past pre-clinical so a raise now should not be necessary. What I'd be saying to interested parties is that if we get past pre-clinical without a deal then we'll go for a raise and you won't get a deal before P2 at which point the price will be much, much higher. Exactly as Tim demonstrated in his update slides.

Interesting article in the Times/BMJ that 'herd immunity' might be closer than we think as testing is not covering all the immunity/antibody angles. If that is the case then the focus shifts from a vaccine to therapeutics, which should work in our favour as the need will be for drugs that treat those who catch the virus and go on to develop severe symptoms rather than antibodies that moderate the infection.

Hi Stoney - I think that's a timely recap of how the process works. Bear in mind that Tim has already said that they are in communication with more than one party and its the data pack that is critical. Pharma's will keep asking for more data because that pro-longs the decision and reduces the risk even if it does raise the price. The key message in the Momenta deal is that the CEO essentially put flags in the ground for J&J to meet and he drove the deal forward - 'If you don't sign we're going back to financing it ourselves'. The element that Tim needs to note is that he cannot sit back and wait for a deal to come to him, he has to drive it. Whilst much criticism has been levelled at the NED's the key man in concluding the deal is the CEO, the NED's are the advisors and policemen. Our CEO needs to stop drinking the wine and start inking the deal. As to 737, the clock is rapidly approaching midnight. I'm also of the opinion that mid-September is a 'news' point. GLA

Any dealing by a Director requires that person to notify the company within 4 working days and the company is required to notify the markets 1 working day later. If SAR signed a deal with a pharma and Tim sold his stake before the news was released to the market then he could be accused of insider dealing especially if there was a hike in the SP. He would also incur the wrath of his fellow director and the NEDS who could probably sue him if the SP then collapsed. In reality if he signs a deal then it will only be with the approval of the BoD. If the deal was for a buy out then it has to be put to the shareholders before anything can be signed.

Basser - getting the MTD and safety profile sorted simply ups the price. That's what the data pack is all about. Then an interested party simply calculates what its worth to them, the risk of failure and makes an offer. If there's a gap in their pipeline its worth more!

According to Jounces website its going through pre-clinical and IND application. Gilead on the other hand are talking about taking it into trials which implies its ready to go. Probably splitting hairs. However, at worst we are snapping at its heels. I'd say that 1801 is probably already there and it won't be long before the data pack is finished and in circulation. If its isn't already.... News on 737 now please while we wait.

Hi Krone - Jounce Therapeutics CCR8 drug is at exactly the same development point as our 1801/2 program. A similar deal is possible - $120m up front puts 3p+ on the SP with the potential for another 17p in milestones - Buy it for 20p.

Hi Potnak - I was always of the opinion that we'd get news in September and the likeliest candidate was 737. Damion's excellent find has added a new dimension to this and I'm even more convinced that this is where news will come from first. Then it's 1801 and possibly Aurora. The latter as you point out is the binary play in the short term and the bonus if it works out.

Belhus - quite agree. We have 4 molecules in play plus a grant application. I would imagine that the phone lines are very busy between multiple parties. I'm of the view that we let them get on with it. Even so I feel its going to be a long bank holiday weekend! GLA LTH's