Sareum’s investment case centres on the development and potential out-licensing of its two internal, preclinical-stage TYK2/JAK1 inhibitors, which are proceeding towards IND (investigational new drug) filings in 2020. Development of Sareum’s Chk1 inhibitor, SRA737, is ongoing for now, but is likely to see a pause, while Sareum’s partner, Sierra Oncology, attempts to secure a sub-licensing deal following a change in its own strategic priorities. The uncertainty created by this decision has weighed on Sareum’s share price, despite trials of SRA737 yielding some promising early data and highlighting a fast-to-market development plan.
However, increased visibility of Sareum’s cancer-focused TYK2 programme SDC-1802 and progress with the previously higher profile autoimmune candidate SDC-1801 has led to an increase in the notional value of the two combined TYK2i assets to c.£20-25m in QuotedData’s model. However, uncertainty over SRA737’s future has led to a hopefully reduction in the value of this asset, previously estimated at £20m in QuotedData’s model.
Within QuotedData’s model, these two countervailing effects suggest that a current value for Sareum now lies in the £20-25m range (0.65-0.81p/share), versus the previously published £25-35m (after normal assumptions for research and development, corporate overheads and tax). Despite the overall fall, the new valuation still offers up to 92% upside against the current share price. There is also the potential for further gains if a satisfactory resolution to the uncertainty over SRA737’s future can be found (see page 8).
