Member Info for RMM3383

This is only my perspective but just looking at SP comparisons is too simple, it’s what’s going on behind the movements that are important. Let’s look at Sierra first – from a peak in June of 18 the price fell and stabilised. It then held until a dip in December. Since December it rose steadily until the end of March and has since dipped but not to December levels. Behind these movements we have a number of factors not least the over excitement that led to the June high. More importantly in my opinion we have the April 1st factor. Sierra flagged that ‘significant’ news was coming and they didn’t disappoint. However, the market has done its sums. Positive news on wider indications means more trials and associated costs. Furthermore, good results will mean the payment of milestones at some point. Sierra does not have the money to cover everything so there will almost certainly need to be a fund raise of some sort. The market does not like costs, it likes profit and this is still some way off for Sierra. Unless of course they are doing deals behind the scenes and to date nothing has leaked in this respect. Not surprisingly the SP is bouncing along the lower end of its range but not at the bottom. The presentation at the end of May/start of June is when it will be buttock clenching time. If we now look at SAR the sp over the last 5 yrs saw a peak in Sept 16 after which it fell and has remained more or less in the 0.75-1.00p range. Until December 18 when the dilution and absence of a milestone produced a low point. At that point the April news was not on the radar and in fact timelines were far from visible. Since the middle of Feb the sp has risen steadily and even now, following the April ‘no milestone yet but positive outlook for additional indications etc’ dip, its still 38% higher than it was in Feb. The latest analysts model suggests we are riding at the bottom end of expectations but points out the factors that could drive a re-rate that are in the pipeline. So if all goes well we get a re-rate in June. If the news in June is not good or indifferent the SP will fall back again. But is that the end of SAR? Unlikely because its not a one trick pony. In terms of timelines what we don’t know is how TYK2 will pan out or whether SAR737 will go for alternative indications. Positive sentiment on this board is just that and hope springs eternal etc. However, as I pointed out earlier this week, its been all doom and gloom at RENE for the last couple of years then suddenly its game on. As Thoth says, if only investing was that simple. In the meantime I expect May to see a drop in the SP at which point it will be time to load up the new ISA allowance. IMHO a re-rate is inevitable but it might not be in June. Timelines etc are debateable but most importantly let’s keep the debate factual, meaningful and open. GLA

Thanks Searle. Hybridan seem to confirm my view that a company valuation of £500m or roughly 16p per share is not unrealistic if we get good news in May/June on 737 and TYK2 gets licenced. Always encouraging to see similar figures emerging from different sources. Even on a risked basis the current price remains a bargain.

I've been watching Reneuron (RENE) for a few years and even have a small residual holding. Over the last few weeks its risen by 130% (although still a way off previous values) and I suspected a concerted 'pump and dump' at play. Turns out it was a leaky ship and today's RNS shows positive news from its Stage 1/2 clinical trial. The comparison with SAR is noteworthy for a number of reasons. RENE's treatment for Retinitis Pigmentosa is a small market compared to what SAR is going for (they do have a stroke treatment but that is some way off reporting) yet RENE has a market cap of £40m currently, twice the size of SAR. On top of this the recent RNS reports positively on the results of a cohort of just 3 patients! The statistical relevance is highly questionable and certainly remains a high risk investment yet the SP doubles on the basis of this news. Compared with RENE we seem to be getting the short end of the stick. As Mike Owen is a NED at RENE I'd like to see some transfer of learning to SAR. From what I can see the biggest difference is that RENE has a significant investor in Woodford Investment Mgt. Perhaps we do need the institutions after all but if so where are they? Considering the growing number of indications that SAR737 can target plus TYK2 then I would have thought we'd have seen more interest. Meanwhile the sp grinds along at the bottom end of the range of expectations. All very frustrating IMHO.

Good to see that the mgt supported the AACR news with a tweet and RNS. Not surprised that the SP dropped as all the informed investors knew it should be good news and there was a bit of profit taking. What I'm looking for next is getting the news out to the wider audience. The content of Monday's presentation is very newsworthy and I'd be chasing the PR agency to get it into mainstream media. That would take us nearer to 1p and provide a springboard for the next round of news which hopefully will be a milestone. The lack of significant movement in Sierra's price convinces me that they are about to raise and the market knows it. Which would be good news for us. GLA

The presentation by Sierra late this evg (UK time) will , in my opinion, have no effect on the sp until tomorrow at the earliest. I'm with Thoth in that any news on the milestones will be in a couple of months. Tonight's presentation is scientific and not investor focused however, if the news is really good then I'd expect at least some speculative buying that takes the sp upwards. I'll be looking for the transcript with interest. More importantly I'm looking to see how SAR manage the news. If the news is good then I'd expect to see the PR machine jump into action within 48 hours. If the news is good and nothing is forthcoming then we know we have duffers as advisors/managers. Even if an NDA is in force there's no block on commenting on news that's in the public domain and is relevant to the SP. 48 hours for the NED's to show their worth and the BoD to instruct the PR company. Clocks ticking..... GLA

Interesting question Afham. I'd struggle to put a value on it because if it has the potential to knock out more molecules then I think we might have seen John and Tim de-risking their business by demonstrating what it could deliver. The big pharma's know the cost of research so if it was part of the deal they'd want evidence that it can produce more than just a couple of molecules. To be honest I'd be happy in the BoD's position to chuck it in if it secured a deal north of 10p now or 15p+ in 9 months time. All IMHO

Having reviewed a lot of the documents available through the European Patent Register (I don’t pretend to fully understand all the legal or scientific jargon) it does look as if they abandoned the Tyk2 US patent appeal because they were failing to convince the judges of their arguments for a patentable/unique compound. If as Thoth says, its already protected under the Aurora patent then the only reason to have pursued it further would be if the licence was going to be sold off independently. This now begs the question as to whether they abandoned the appeal because a buy out is on the cards either for TYK2/Aurora or TYK2/Aurora and CHK2. In previous comments Thoth has stated why he thinks the business might be worth 28p. Independently I’ve looked at all the indications covered by TYK2 and CHK2 (I’m ignoring Aurora because at the moment I don’t think it has any real value). The combined global market for all the indications covered by TYK and CHK is $108bn (and that excludes the ‘life prolonging anti-aging’ element!). Past experience suggests that a 1% share of this market is not an unrealistic expectation once the product matures which would give SAR a value of £800m or roughly 26.7p a share (allowing for dilution from the share options). To acquire the company a buyer will look for a significant discount to allow for the risk (not passing clinical trials etc) but my high level analysis suggests that when TYK2 gets into pre-clinical SAR (TYK2 plus CHK2) could command 10-17p per share for a buy out. Based on what we’ve seen so far (or more correctly what we haven’t seen) then NED/Information management issues aside, it does suggest that if negotiations are underway then we may not hear something ‘big’ for a while yet. In the short term I would hope that enough information surfaces that at least takes us to 2p by summer and maybe 4p by the end of the year. After that, as Thoth would say ‘its game on’. Of course there’s nothing to stop an early buy-out but at a lower price. All the above IMHO.

Minor correction but we'll have to wait until Tuesday for a news update as Sierra aren't reporting until 3pm Eastern Time which is 8 pm BST. Roll on Tuesday.....

Given that Sierra have trumpeted the poster on 1st April I'm a little surprised that their SP isn't going upwards more steadily. Makes me wonder if the market sniffs that they are going for a fund raise on the back of it to pay for additional trials costs and potential liabilities (milestones). If so then it could be good news for SAR. Anyone else thinking the same?

Lucan - Spot on! Hence my concern. I've done my maths and agree with Hybridan that this is currently a bargain target.

Its interesting that after a short rally in the share price the attention has quickly returned to the performance of the Chairman (and by association the other NEDs). In a previous note I made the comment that I thought the NED’s were out of their depth and if the failings continued I would be at the next AGM to make life very difficult for them. I’m very aware of what a NED can and should do and so far I’m not seeing it. With a strong news flow potentially on the cards for the next few months and possibly even through to 2020 the NED’s should be advising Tim and John on how to get the messages out and support the company’s image and subsequently the SP. It’s all very well to say that the pharma’s are ‘aware of us’ but to be brutal I’ve heard and seen too many cases of ‘I don’t know what happened. We had the best product but while we were quietly getting on with it the competitors stole the market’. Ask any NHS consultant/GP why they prescribe a certain product and the answer is almost invariably because that company has the best sales strategy. Popping up with a tweet or a short appearance on a little known investor channel is not getting the message out to the bigger audience (both in terms of investors and suitors). PR companies are very effective but you have to give them material to work with and a remit to communicate. I trust the science but that won’t be enough to get this to market. If they can't manage a strong story leading up to and after Sierra's poster on 1st April then the die is cast in my opinion. Forget Brexit on the 29th and get focused on April 1.

Looks to me like they've withdrawn the appeal so that they can re-file with additional claims - “continuation” application is a new patent application allowing one to pursue additional claims based upon the same description and priority date(s) as a pending “parent” application. Continuation applications are a flexible tool, useful for furthering numerous business objectives.'

https://www.nutter.com/ip-law-bulletin/continuation-patent-applications-10-reasons-you-should-file

The above link is worth a read for boith the up and downside of what they are doing. GLA

Thanks. I've noticed from my watchlist that there's a rash of 'pump & dump' going on at the moment so I'll play my cards accordingly and ignore the MM games.

Hi Thoth. What are your thoughts as to why there might be big movements down? The obvious one is that the patent hearing goes against SAR but the only other one I can immediately think of is that the Sierra Poster on the 1st April fails to meet market expectations. I'm worried that investors and MM's think this will trigger a milestone but I suspect that the triggers are far more complicated than encouraging findings from a preclinical model. If the potential upside is around the 737 trials and a possible TYK licence then its going to be a rocky ride until at least the end of H1. Would appreciate yours and anyone else's perspective on this. Tim having a new suit is not enough for me to invest more!

Overview mentioned SRA737 with two key phrases: ‘We are particularly excited about SRA737 and PARP inhibitors’, ‘Look out for future disclosures’. The presenter then went on to talk in detail about Momelotinib which is obviously their current focus given the completion of 2 Phase 3 trials. Towards the end of the 30 min presentation he then took 5 mins to talk more about SRA737 and then SRA141. With regard to 737 the key phrases were ‘positive impact’ and ‘distinct opportunity for this asset’. The webcast then ended with him reporting that Sierra have $106m in the bank and are well positioned to take their pipeline forward. As this was more of a clinical presentation the tone was practical but far from downbeat. Roll on April

So, the Proactive interview was released yesterday in which Tim justifies the NED appointments. This interview would have been booked some time ago. Options were agreed last week and the RNS announces them today. Someone has been thinking this through. What was significant for me in the interview was the clear statement from TIm that in their opinion TYK2 is ready for licence now. I'm not sure whether the interviewer got all his questions from reading this board but they certainly addressed head on many of the topics at the top of the PI agenda. Milestones are payable and the trigger points are known but he's not saying. Fair enough, there may be a gagging order in force or he's worried about saying too much. What I love about Tim's interviews are that he goes so far, gets dangerously close to looking excited then immediately worries he's said too much and clams up. Too late Tim, we've already got the message. And we can expect more news, as we should. Could be a white knuckle ride over the next few months.

As Thoth says, the NEDs cannot influence the Patent deliberations. That’s for the Lawyers to do based on the science as provided by John and Tim. What they should be focused on in my opinion is how they manage the news due from Sierra in the short term and by getting TYK2 licensed.

Following on from one of my earlier posts I’d like to draw people’s attention to what two of SAR’s NED’s have been involved with elsewhere and what we should be prepared for. Mr Parker is a NED at Silence Therapeutics where the share price languishes at roughly 25% of where it was a year ago. A previous CEO at Silence, Ali Mortazavi, has this week been revealed as a big investor in Reneuron whose share price has risen by 50% on speculation that he thinks this is a winner in the retinal stem cell arena. Michael Owen is a NED/Advisor at Reneuron and from what I can see was involved when they consolidated the shares. Even with the recent rise, the SP is still more than 10% below the consolidated price. Michael Owen is also involved with Avacta, another stock that consolidated and whose share price languishes at 50% of the consolidated price despite releasing ‘good’ news. This is not an attempt at conspiracy theory but I feel that if the SAR BoD do actually read this board then they should note that the track record of the NED’s leaves a lot to be desired. Neither Avacta, Reneuron or Silence have been good at managing news and PR with the result that the SP has fallen badly for all 3 and many fingers have been burnt. Furthermore the recent rise in Reneuron’s SP is based purely on speculation that one investor (for which read speculator) knows what he is doing (very dangerous in my opinion). If SAR goes the same way (ie they SP continues to bounce along the lower levels, or worse) then the NED’s have to take responsibility (as they are the strategic advisors) and they can expect a very rough ride come the AGM. I’m not bickering about what they are paid but I am very concerned about what they are actually doing because it’s looking increasingly like they are out of their depth in terms of creating and preserving shareholder value. If an organisation like Hybridan can identify that the SP is 30% below where it should be then the NED’s are failing in their duty on how to advise the management on market communication. Should they go? In my opinion that would be very bad PR for SAR. What they should do is their job and if they don’t we should find a way to make them accountable. All IMOH and I very much hope that my concerns are proven wrong over the next few weeks when there is ample opportunity to break and manage newsflow that should boost the SP.

Hi Thoth. I'd beware of the FT.com info as its a bit misleading. Jarvis Investments is made up of a lot of PI's including me. You will also have seen that Alliance Trust have just under 20m shares and are classified as an Institutional Holder yet almost half of their holding is again me. Neither Jarvis nor Alliance advise me so the influence of Parker is nil. I've been doing a lot of research on Parker and Owen recently and their performance as NED's. I wouldn't put any of the 'institutional holdings' down as a result of their work. I've also looked into how NED's can be held accountable under AIM rules and the answer is that the rules are weak but what really hurts a NED is reputational damage and with the vast majority of shares held by PI's we do have some clout if organised. At the moment I don't believe we have any reason to challenge what they are doing (which should be to advise TIm and John on strategy) as from what I've seen they know the value of what they are building and its in their interest to maximise it. The insight from Searle's contact is I believe both balanced and realistic and what we have seen over the last 12 months is housekeeping and steady positioning for when news (hopefully positive) finally does arrive. All in my opinion of course.

An excellent find Thoth. Thanks for sharing.