Member Info for RMM3383

Didn't take long for the MM's to spot the stop losses!

https://s28.q4cdn.com/726829854/files/doc_presentation/2021/08/2021.08.05-5153-call-slides_FINAL.pdf
Slide 4 - Specific mention of SRA737. We're up and running.

With one move he manages to underpin Momo AND secure a drug that works with 737. Very clever. His investors probably won't like the move initially but in the long term its potentially very good news for us. I also don't rule out other ventures that directly work with 737. He's gearing up to be more than just a one trick pharma and clearly 737 is not coming back!

We’ve often debated on this board the benefits of SAR not being a one trick pony. In terms of risk mitigation that’s a definite benefit. In terms of assessing future value it’s becoming an increasing conundrum. 1801 and Covid might be a sideshow but there’s no denying it has both accelerated the potential and broadened it. 1802 with the added patent protection is growing in potential meanwhile we wait to see what Sierra will do with 737. The problem is that 1801, 1802 and 737 have too many options. I’ve always believed in focus followed by extrapolation. Get it right first then extend the options. I recall a couple of years ago at the AGM that Tim made a simple statement – ‘We only need it (TYK2) to work in one indication’. In other words, after that all bets are off. If negotiations are underway (could be Agile, could be another partner, could be a licence for 1801 or even 1802, might even be a new angle for 737) then they are going to be complex and I don’t envy the BoD. The more I think about it the more I don’t think it’s a simple TO that is underway. What we could end up with is a stake (a not inconsiderable stake) in a business with huge potential and multiple partners. For those that want to cash out there will be a significant upside but for those who hold on the long term riches may exceed our wildest dreams. And that's what I think the HNWI's have invested in. What we shouldn’t expect is a straight line progression but peaks and troughs as the BoD navigate ever changing/expanding options. For the LTH’s here be prepared for the doomsayers and the dreamers who will visit us with monotonous regularity as news drops. I suspect that like a British summer it won’t be blue skies all the way but we’ll get sunny intervals interspersed with heat waves and flooding. For me the key elements that give me confidence are the NEDs (commercial acumen) and the science (the IP). In SAR I believe we have both and like Thoth I’m of the opinion that this is a once in a lifetime opportunity. GLA

Thoth - don't think we'll make 17p this week. I think you might be a week out! IP is everything and immune+cancer is massive. GLA

Had to chuckle yesterday when the Terrorgraph reported that supermarket shelves were going to be empty as the pingdemic took grip. While the Delta variant surges, hospital waiting lists get longer and countries like Australia go back into lockdown the headline news in the UK is that Tesco might run out of bottled water! Clearly no one is familiar with that device in all households called a 'tap'! God help us if there is a Wotsit shortage......

We're now nearing the point when things could get very exciting. The BoD were very quick off the mark to release the PoC results. Knowing how bureaucratic government departments are they'd need at least 2 weeks to digest the information let alone make a decision. In the BoD's position I'd have taken the opportunity for some down time in readiness for another busy period. Next week I expect to see the newsflow start to gear up. My anticipation is that we'll get a heads up on both 737 and 1801/Covid by the end of the month. I'm not even remotely concerned by the small drift in the SP, this is after all AIM and the experienced here know how it works. As to valuations there's nothing wrong with a bit of healthy debate and I'll stick by my figures for the time being. However, with the likes of Chris Whitty et al going public on how bad things could get the upsides is there for the taking. One thing I do expect the BoD to do is to re-visit the effect of 1801 on pneumonia etc. The RNS stated quite clearly that the PoC results were inconclusive due to testing issues. This is a big long term market and worthy of further research. I'd be very surprised if some money wasn't being spent revisiting this angle. Meanwhile there's sunshine (or even Wotsits) to be enjoyed. Much more productive than Womble baiting! GLA

Just browsed the board while a guest of Southern Rail. Can’t believe the debate is still raging over the warrants and cash flow. More money in the bank from the investor (clearly not a trader) and news on the horizon. Whoever they are they’ve invested and won’t be out until the far lady sings. Meanwhile we’ve even more money to take the pipeline forward. Enjoy!

More money in the bank strengthens the negotiating position and he gets his voting rights.

Potnak - Thanks to Garmin i usually know where I am but that's not much use when you're soaked through and stood by the side of the road with numb fingers trying to find the sodding piece of glass/nail etc that has wedged itself in the tyre and punctured both your spare inner tubes! That's when I reach for the phone and call emergency services - the Wife!

So Potnak, I'm 'dull as dishwater' eh? Best leave my bikes in the garage and disappear into the home recording studio to contemplate which bottle I will liberate from the cellar to go with my moules frites this evening while plugging in various synths and shredding on one of my left handed axes. Alternatively I could clean my Hoka's and order a pair of Carbon X2 ready for the next big event. Decisions, decisions. Got to do something while we wait on the next re-rate.

London - Not sure why the exercising of warrants would imply the HNWI has already sold their 'two lots'. If the HNWI believes in the science then the exercising of warrants simply puts more money into the company and gives them a stronger bargaining position to negotiate an even better deal.

C79 – thanks for the link. It’s a really interesting read and adds to what I was reading last night:
https://www.embopress.org/doi/full/10.15252/embj.201488856
To some extent it means that a lot of immunosuppressant therapeutics will need to handled very carefully and achieving the balance won’t be simply a case of ‘pop this pill and you’ll be fine’. Timing, dosage and ‘in combination with’ are all going to be key elements. What I hadn’t fully realised was the connection between IL-6 and depression in all its forms. What I have noticed over the last decade is the increase in anxiety based disorders and as referred to in the article, the lack of progress made in the therapeutics arena for psychiatric drugs. Long Covid has been associated with depression and anxiety but often diagnosed as due to the stress of being locked down or a persistent tail to the virus often tied in with ongoing (post viral) fatigue. From both articles it would appear that IL-6 is a contributor to both depression and some long Covid symptoms. Only this week there was a headline about ‘heart drug cures long Covid in hours’. Turns out that one patient had responded. Hardly a clinical trial. From my limited understanding the treatment of both depression and long Covid is highly unlikely to be cured in hours. However, as Thoth has previously surmised, the immune system may well be a culprit in a huge range of conditions. The full article (link posted by C79) mentions IL-6’s role in glucose regulation (ie diabetes) and also references sepsis. Should our TYK2 (1801) prove effective against Covid and something like RA then it does open up a completely new channel of opportunity. Interestingly the article referenced by SOG also mentions Dexamethasone as an IL-6 related therapeutic, a drug that we now know 1801 outperforms. Going into the Clinic for Covid will be an important step for 1801 but I’m also wondering if it means we should hang on to it until we have a better understanding of its full applicability. We certainly don’t want to give it away at a bargain price. On the other hand, I would far prefer it if it went on licence to a company that could speed it through trials and put it to good use against the likes of depression/diabetes/sepsis. It may be far more important than even the most optimistic ramper can see. However, as SOG says, if it doesn’t work then we may have nothing, or just a single indication drug, or just 1802 or just 737. Patience. GLA

Krone/Potnak. I don't think Dilly will on licence. Why invest in people if you aren't going to use them? If its Merck then its a biggee. An easy 6p on the SP. Get 737 underway, put 1801 into Agile and line up 1801 for Immune and 1802 for Cancer and 50p+ by Xmas. Or its TO. If 1801 works against Covid then I really can't see us hanging onto it or the company for that matter.

Potnak - Don't forget 737. IMHO its far from a dead duck.

Back from my walk (in the sunshine!) to a rammed board. All opinions welcome and I certainly don’t mind the comments that we should always retain a sense of caution. To date my ‘waffle’ has made me a ‘paper millionaire’ and if you review my posts over the years I’ve adjusted my expectations as the news has ebbed and flowed. However, Covid has totally changed the SAR dynamic and my expectation at the outset(pre Covid) was nearer 20-30p rather than £1-3(post Covid). Hence my revaluation. We now have data on 1801 from the POC against Covid in addition to all the data behind toxicity. There is also plenty of data on 737. To address one of the comments very early today I don’t think Dilly is just sitting on 737. You don’t recruit additional staff along the lines he has done without a strategy in mind. If, as I suspect, he’s waiting on something then we’ll find out in due course. It’s far from unusual for Biotechs to work with big names under NDA for years before releasing details. Patience. Overall my ‘waffle’ revealed (to me at least) that there’s plenty of reason to now re-rate the upside. The downside is a no-brainer but knowing when to take profit is not so easy without quantifying the options. Whereas previously I would have accepted 30p as a good price I’ve revised my ceilings. If we get into Agile, 737 goes live and 1801 goes into CTA against a significant indication then I’ll stick around for more than a pound! Not advice, just opinion and I’m aware of the risk – upside and downside. So why haven’t we done a deal and been able to sell the company for a large fortune? The BoD have been quite open about the industry benchmarks for the size of deal they want. However, that was before Covid and Covid has changed the business model. Would you sell your company for 30p a share if suddenly it could be worth £1 a share if you waited just a little longer? Why as a shareholder would I accept 30p if within 6 months it could be worth £1? Especially as the Covid angle represents very little risk – no Agile or Agile fails and we still go into CTA for 1801 followed by 1802(essentially where we were pre Covid). Patience. Meanwhile it’s time for refreshment and the bar downstairs has 160 gins to choose from. Now who would have thought a few years ago that Gin could have taken on such a new dynamic….. PS Thanks for all the ‘recommends’ and comments. Makes getting up at 6.30 this morning all the more rewarding. Sorry Krone, my model can't cope with the Veterinary angle!

Based on all the components I’ve calculated total values as follows:
Pre Agile Value (ie now): 56p
Post Agile with CTA for 1801 in Immune: £1.15
Total potential value by Xmas (success in Agile and 1801 signed off for Lupus/RA CTA, 737 combo underway): £7.77
Total potential value in 2-3 years assuming everything is successful: £32.93
And now the caveats. A total potential value is only a start point/benchmark and as I’ve said before a buyer would want a discount against future value. If I was negotiating a TO by Xmas or H1 2022 then I’d be looking at a 90% discount (we are still very high risk) which would mean a SP of between £2.33 and £3.29. (SAR valued at up to £10.9bn). That sounds a lot but looking at the potential value in the pipeline its not unreasonable. If SAR was able to go it alone and commercialise everything then Thoths £30-40 is perfectly viable but ONLY if everything works and that’s a big, big IF. It’s also years away and will involve deep, deep pockets. IMHO we will simply be bought out when the data starts to demonstrate that one or more drugs work. By Xmas I think we’ll know where we’re heading. If 1801 is successful against Covid and also goes into CTA for Lupus/RA then negotiations will be fast tracked. At the moment I believe we’re on the radar, under the microscope and communicating. Success against Covid will move the goalposts and timescales. GLA and this is not investment advice, just my views. Forget the 10p party, the real party will be when we go past £1. I concur with Thoth that this is a once in a lifetime opportunity but in the interests of balance if everything fails then we have nothing! I’m now off to walk the South West Coastal Path……

Aurora is on the back burner. The Chinese couldn’t solve the solubility issue but they did make progress. I suspect that in the right hands it could be cracked but whoever does it will need very deep pockets. On this basis I’m going to value Aurora at 4.9p based on it having potential in AML but at this stage being very high risk. This is not a current value but something I would put on the negotiating table in the event of a TO. SKIL again qualifies for a TO value and previously I put this at 6p. I’m going to stick with that but bear in mind if 1801/2 were to go the distance then SKIL could potentially deliver even more value.

My view is that we will go into a triple combo trial for Anogenital. If Thoth is correct and the partner is Merck then we have potentially another blockbuster. Keytruda is worth $11bn pa to Merck. Assuming 737 worked with drugs like Keytruda and Gemcitibane (we already know it works with the latter) then as a minimum it adds 18p to the current SP. Get it past the post and its worth £1.22. We might only have 27% of 737 but it’s a long way down the track compared with 1801/2 and in my view will deliver the goods soon and at no cost to SAR. Win, win.

We don’t have a steer yet on which indication 1802 will go up against but I’m going to use NSCLC as a benchmark. Based on the cost in the UK of treating someone with NSCLC, multiplying this up to include the US and EU and then assuming 1802 would be beneficial in only 10% of cases gives a Pre CTA value of 14p which rises to 41p on going into trials and £2.70 on full commercialisation. Should it prove effective with Prostate and Cervical Cancers you could triple these figures. Add in something like Pancreatic where treatments are limited and you could quite easily double the figure again. As a caveat these would be full commercialisation figures 3-5 years out and would come at a significant cost. Getting just one indication sorted would be my expectation before SAR is acquired.