Operating Model and Portfolio
Sareum's research, which is all outsourced to third party laboratories, is focused on 'targeted small molecule' therapies, whereby the aim is to disrupt specific biochemical processes involved in tumour growth through inhibiting a class of enzymes called kinases. Sareum's approach is superior to conventional treatments such as radiotherapy or chemotherapy because - as the name suggests - it is more targeted and therefore minimises the impact on normal cells.
In May 2010, Sareum launched its "SKIL" technology platform, which includes a patent-protected molecular core and the intellectual know-how to fine-tune these molecules into inhibitors of a wide range of kinase enzymes. Sareum's research is focused on building its portfolio of data on these molecules in order to better attract potential licencees.
Sareum has developed seven drug discovery programmes (five of which are active) that are now at various stages of pre-clinical development. The Checkpoint Kinase 1 (Chk1) Programme - its most advanced - has been developed in
a mutual programme with leading research organisations the Institute of Cancer Research (ICR) and Cancer Research Technology Ltd (CRT). It is close to completion in preclinical scientific terms for outlicensing, with several Chk1 inhibitors having shown efficacy in 'in vivo' (i.e. within the living) models. Sareum expects it will soon be able to nominate a candidate compound for Chk1 and sign a licensing deal with an organisation who will take it through the final pre-clinical stage and into phase I trials.
The latest update on this programme, released today, announced that "the combination of a collaboration Chk1 inhibitor, dosed via the oral route, in combination with a chemotherapeutic, gemcitabine, demonstrates a greater than two-fold reduction in cancer growth rate compared to treatment with the same dose of gemcitabine without the Chk1 inhibitor". Furthermore, other pre-clinical in-vivo studies conducted for the programme have shown that the collaboration Chk1 inhibitor, dosed alone, can reduce cancer growth in models of AML (acute myeloid leukaemia) and neuroblastoma (a childhood cancer). Indeed, certain cancers, such as these, "are believed to be dependent on Chk1 for survival".
Other programmes currently under development include the Aurora Kinase programme, aimed at preventing mitosis (cell division) in tumour cells; the FLT4 Kinase programme (see below), aimed at preventing tumour spread (metastasis); and the FLT3 Kinase programme, aimed at treating Acute Myeloid leukaemia (AML) and inflammatory diseases such as multiple sclerosis and rheumatoid arthritis. There are also three other programmes on hold, but these need not concern us at this stage.
Aurora+FLT3 Kinase - what's all the fuss about?
On 7th February Sareum announced the results of a recent pre-clinical in-vivo study for its Aurora+FLT3 Kinase programme, which is targeting acute myeloid leukaemia (AML), the most common form of adult leukaemia. The results "showed that the leukaemia regressed to such an extent that no detectable cancer could be found in any of the cases treated (ten in total) with a Sareum compound".
These are very positive results which, crucially, "compare very favourably with those from similar pre-clinical studies published for Aurora kinase inhibitors currently undergoing clinical trials". Following the massive volumes of shares traded on the back of these results, the company was compelled to comment that it was NOT "in advanced stages of discussion with a potential licencing partner and there can be no certainty that the announcement of these results will lead to a licencing agreement being entered into". HOWEVER, it added that "the results of the study have, in the ordinary course of business, been sent to potential licencing partners" to "determine their interest" in the data. I think we can take that as a euphemism for 'there are plenty of pharma companies sniffing round this'.
Upside Potential
Following the recent results from the Sareum's Aurora+FLT3 Kinase programme, broker Hybridan commented that "Major pharmaceuticals groups have a well-known need to build their cancer drug pipelines, as well as the need to bring drugs to market quickly. Sareum is well positioned to fund and execute its ongoing business plan of further development and commercialization of its drug cancer programs." As yet, none of Sareum's programmes have been partnered up, but that should soon change. In recent years, up-front payments in partnership deals have ranged anywhere between $5 million and $230 million, whilst further 'milestone' payments have been in the range of $70 million to $660 million. It is not hard to imagine what kind of effect such a deal would have on a company with a market cap of under GBP20 million.
At this point it is worth pointing out that while cancer drugs are the 'holy grail' of medicine, the majority of compounds fail to make it through to commercialisation. This is indeed a very risky business. That said, the potential rewards are huge.
The firm opportunistically raised GBP500k through a placing on the back of the euphoria following the Aurora+FLT3 Kinase results, and whilst this was at a 40% discount to the then prevailing price, the news was well received by the market, which drove the shares higher. The firm now reckons it has enough cash to last between one and two years (not bad considering the rates at which some of the other biotech firms burn money). The funds raised will be put to use adding data to the Aurora+FLT3 programme to bring it up to the clinical stage. Sareum's immediate future looks very healthy indeed, and it is worth a speculative buy at 2.2p.
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