Sareum Holdings (LSE:SAR) — Interim Results

0:01 Good afternoon, and welcome to the SAREUM HOLDINGS PLC Interim Results Investor Presentation. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to chairman, doctor Steven Parker. Good afternoon, sir.

0:36 Hello. Good afternoon, everybody. Thank you for joining the call as we go through the half year results and the various pro progress that we made in the last few months to discuss. With that, I'm gonna hand you over to Tim Mitchell, our CEO, who will take you go through the presentation and and guide the q and a. Thank you.

1:02 Thank you, Steven, and good morning, everybody. Thank you for joining us this afternoon. Sorry. Good afternoon. I'm here with our CSO, John Reeder. So John and I will take you through the results presentation, then we'll hand back to Alex who will host the q and a session.

1:21 So so let me start with highlights from the past period. The main news for us, as we announced on Monday, is that we've applied to run the phase one clinical trial in Australia on SDC1801. That's our TYK2 JAK1 inhibitor for autoimmune diseases. So the preparatory work for this trial is all completed. We're expecting a decision on approval by the HREC, that's the human resource human, research ethics committee, and acceptance of the clinical trials notification by Australia's Therapeutic Goods Administration in the next few months. And we'll look to open this trial and start dosing healthy volunteers shortly after receiving this approval. So we'll go into more details on the study later on. But if we first look at the other programs that we have running for SDC1802, that's the TYK2 JAK inhibitor for cancer immunotherapy.

2:14 We continue to work on the translational studies to identify the best cancer application for this candidate. And we note that our experience with the closely related SDC1801 molecule will help us plan and execute the further preclinical studies. For SARE737, the Check-one inhibitor for cancers, we've reported that our co development partners, CPF, have now received the clinical study reports, and other documents back from Sierra Oncology, and we're evaluating the potential future development opportunities alongside CPF. We've also noted an expansion of the SRA737 patent estate with the granting in The US of, the patent describing the combination of SRA737 with PARP inhibitors as a method of treating cancer.

3:04 On the financial side, we reported a loss after tax of 1,400,000, so that's higher than last year, but it reflects the setup costs needed to start clinical trials cash and balance of 2,900,000.

3:28 Looking looking at where our programs are on the development pipeline, we see that SDC 18 o one at the top there is about to enter clinical phase one. As well as the potential to treat autoimmune diseases such as psoriasis, which is our will be our initial focus, there's still the opportunity to investigate the treatment of respiratory symptoms arising from viral infections such as COVID nineteen, and our phase one a trial is expected to enable all, applications of SCC eighteen o one. Our primary focus over the past few months has been on SDC eighteen oh one, as you can imagine, but SDC eighteen oh two still remains there in preclinical development. SRA737 was formally returned to us in January this year, having completed two phase onetwo trials while it was under license to Sierra Oncology.

4:21 These were as a monotherapy and in combination with low dose gemcitabine, And there's also preclinical data to identify effective combinations of SRA737 with a number of targeted therapeutics, including cancer immunotherapies and the PARP inhibitors I mentioned earlier.

4:43 So as we know, our main focus is on our TYK2JAK1 inhibitor, that's SDC1801 for autoimmune diseases. And we've seen particularly in the last few months, that the TIC and JAK space is being increasingly recognized as an area of great commercial interest. So BMS' so TYK2, was the first TYK2 specific inhibitor to be approved for sale. That was in September last year. And importantly, the approval didn't come with any of the black box warnings for severe side effects, that we've seen in the first generation JAK inhibitors, such as tofacitinib and baricitinib. We've seen good clinical validation by BMS and others for TYK2 and dual TYK2 JAK1 inhibitors in both psoriasis and psoriatic arthritis.

5:32 And there are mid- and late stage clinical trials ongoing for TYK2 and TYK2 JAK1 inhibitors and several other autoimmune diseases, including lupus and inflammatory bowel diseases. And we're expecting to see readouts from these over the next few years. In terms of commercials, we note earlier this year that Takeda acquired, Nimbus Therapeutics' late stage TYK2 inhibitor for an upfront cash payment of $4,000,000,000 which I think very nicely underscores the commercial potential of these types of inhibitors. And then also that BMS are forecasting $4,000,000,000 sales, for TYK2 inhibitor in twenty twenty nineteen. And for the respiratory symptoms arising from viral infections, we note that two two of the, the first generation JAK inhibitors, that's tofacitinib and baricitinib, are being approved for use in some COVID nineteen patients.

6:33 So I'll now hand over to John who will take you through the scientific programs in more details. Yeah. Thank you, Tim, and good afternoon, everybody. So inhibition of the, JAK family of kinases can restore immune system balance. And TYK2 and JAK1 are both involved in a signaling pathway that can be deregulated in multiple autoimmune diseases. And what we've shown in the schematic on this slide is that TYK2 plays a very important role in signaling in the interferon alpha, the IL-twelve and the IL-twenty three cytokines.

7:21 Deregulated interferon alpha, IL-twelve, IL-twenty three signaling is associated with diseases such as psoriasis, inflammatory bowel diseases an additional lupus, rheumatoid arthritis, resistance to immuno oncology,

7:40 therapeutics, and of course, that's very important for SDC eighteen oh two, and viral bacterial pneumonia. So the inhibition of both TYK2 and JAK1 has the potential to yield superior efficacy compared with agents that block just one of the two kinases. We believe TYK2 and JAK1 are optimal targets for autoimmune diseases, and targeting other kinases of the same family, so that's JAK2 and JAK3, has led to unwanted side effects in some patients.

8:21 SGC1801 therefore is being, positioned as an autoimmune disease therapeutic. The initial focus will be on psoriasis. That's an autoimmune condition that affects the skin.

8:35 And as you've heard recently, we have now applied to the Australian regulatory authorities to perform a phase one trial in Australia under the Clinical Trial Notification Scheme. Once we have regulatory approval, there's a plan to commence the Phase 1a trial, which will investigate the safety and tolerability of an oral formulation of, capsules of STC-eighteen oh one in healthy subjects.

9:04 And provided we get satisfactory safety data from that Phase 1a study, we intend to commence a Phase 1b clinical study in psoriasis patients next year. So in preparation for the trial, the synthesis of, STC1801 drug substance, that's the molecule itself, has been completed under GMP conditions. We have a surplus of material for the planned phase one clinical trials. And we've completed manufacture of the capsules of SDC1801, also under GMP conditions, which will be used in the phase one clinical trial.

9:52 As I'm sure most of you are aware, we submitted last July an application for a clinical trial authorization to the MHRA in The UK. We provided a robust preclinical data package. The preclinical data was generated in world renowned and world leading CROs. However, in November, last year, the MHRA stipulated that they wanted an additional review of some of the preclinical data by The UK GLP Monitoring Authority. Unfortunately, to date, MHRA has not proceeded with the request, of UK GLP monitoring authority. This is despite us asking them on repeated occasions to do that.

10:43 So in the meantime, and in parallel with these discussions, we looked at alternative locations to conduct the clinical trial. We looked at two or three, territories in Europe and, additionally, Australia, and we identified Australia as the optimal route to progress SDC1801. Australia is an ideal location for Phase one studies. It has state of the art research facilities, a streamlined and efficient approval process,

11:23 a good access to psoriasis patients, and significant tax incentives for companies to conduct research in Australia, so an allowance to claim up to 43.5% of eligible r and d expenditure as a cash payment. We've established the required local presence by setting up a legal entity in Australia that allows us to access the r and d tax credits. Moving on to STC1802. This is a molecule we're positioning as a cancer immunotherapy. It's an immunomodulating molecule that's demonstrated good efficacy in preclinical models of cancer.

12:11 We need to complete our translational studies to define the optimal cancer application, which would allow us to select a patient population prior to commencing a phase one clinical trial. And as Tim mentioned earlier, the experience that we've gained in the development of STC eighteen oh one will greatly aid in the development of STC eighteen oh two, the two molecules derived from the same chemical class. So the synthetic experience we've gained will really be beneficial in pushing forward with eighteen oh two.

12:49 Moving on to our co development pipeline then, and we're talking about the CHEC-one inhibitor, SRA737, targeting cancers. This was originally developed by SAREUM in collaboration with several Cancer Research UK funded organizations and including our current co development partnership with the Cancer Research Technology Pioneer Fund, CPF. Under the terms of the co development partnership, SAREUM is entitled to 27.5% of commercialization revenues. The program so far has successfully completed two phase one, two clinical trials, which were funded by Sierra Oncology. Sierra was subsequently purchased by GSK.

13:38 That was to access Sierra's myelofibrosis therapeutic maimolotinib. And GSK Sierra decided to return the program SRA737 to CPF. So we've now received the clinical study reports, the other associated documents and data, in March of this year from Sierra, and SAREUM and CPF are evaluating potential development opportunities for SRA seven thirty seven. Okay. I'll hand you back now to Tim to take you through the rest of the presentation and to lead the Q and A session. Thanks, John.

14:24 So we announced our half year financials today, so I'll quickly take you through the main points of those. So on the income statement here, we see an increase in operating expenses over the previous period. And noted earlier, this reflects the increased costs to get the eighteen oh one TYK2JAK1 inhibitor ready for its clinical trials.

14:47 You'll see a a tax line there, $2.85. That's the r and d tax credit that we'll claim back later in the year, as a cash credit. And, of course, there's another six months of of spend to add on top of that.

15:06 On the balance sheet, we see cash of 2,900,000. Okay. So I'll finish the presentation part then on a slide on where we see the value in SAREUM and a particular with a particular focus on our SDC1801 asset. So we've noted the commercial potential, particularly in the TYK2 space, and the interest in the area from, the pharmaceutical majors, so BMS and Takeda are obviously heavily invested in the area. The science has been well validated both in the laboratory and in the clinic, and the absence of black box warnings with the SOTIC-two approval validates

15:53 good safety profile obtainable with TYK2 inhibitors. Psoriasis and other autoimmune diseases, are a very large market opportunity, with psoriasis affecting over sixty million, patients worldwide and BMS focusing sales of $4,000,000,000 also TYK2. So now we have the opportunity to be a clinical stage player in this area with the first trials on 1801 expected to start very soon. Okay. So I'll hand over to Alex to host the Q and A.

16:28 Tim, John, Stephen, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed by your investor dashboard. As you can see, we have received a number of questions throughout today's presentation, and thank

16:52 you to all of the investors for submitting their questions. Alex, if I may just hand over to you to read out the questions and give responses where it's appropriate to do so, and I'll pick up from you at the end. Great. Thank you. Okay. So first question is given that the required GLP review has not yet taken place, meaning that any areas, errors, or irregularities are currently unknown, what's to stop the Australian authorities from raising the same concerns? Shall I take that and and maybe add anything else, John? So we've we've inquired amongst people who are are, I suppose, have expert experience with the Australian authorities just to double and triple check that this won't be an issue, and we're assured it won't. So we're not expecting the same problems with the Australian or even European regulators as we have done with MHRA.

17:43 So we understand this is a an MHRA specific issue that we won't be encountering elsewhere. Okay. Could you please tell us if there are any transferability issues from Australia for phase one applied for into other potential regions or regulators, for example, The US or The UK? Yes. So first in human data generated in Australia is accepted by the FDA, by EMA, by MHRA, by the Japanese authority whose acronym I've forgotten temporarily. But, yeah, maybe the data is is perfectly acceptable to to other regulatory authorities around the globe. Great. What is the time scale for commencement of the trial following the CTN HREC approvals?

18:33 The signed off project plan with the sponsor CRO is presumably just an indicative timeline. Yeah. I mean, I'm not gonna go into the details of exactly those timelines, but we we have done everything that we can beforehand to enable us to start the trial as as quickly as possible after we get the go ahead from the Australian regulatory authorities. So there there should not be much of a delay between getting that approval and beginning the trial. Great. Would 18 o one have a therapeutic opportunity in endometriosis at all? Pass. I'm I'm not I'm not gonna I I don't know. Let's be honest, Tristan. Yeah.

19:23 I I I I've I've not seen that major. I'm not aware of it. Is it? We can we we can have a look, and we'll provide a written opinion on that. But I I certainly not something that I've come across in the past. Okay. So how does The UK tax credit for r and d following the budget compare to the mood music we were hearing beforehand? And what more broadly do you think the UK government needs to do to encourage r and d here? So I think we yeah. We we are very pleased to see that tax credits have been pretty much restored. So the the autumn statement last year, which said that, r and d tax credits for, for SMEs were gonna be essentially halved.

20:09 I think we we were very disappointed to see, but there there's been extensive lobbying by by, I suppose, the people in the industry personally, including myself, and then the bio industry association have been very active in, persuading the government to to change its mind on that. So r and d intensive companies such as ourselves, should be able to claim tax credits that I I suppose I haven't done a like to like comparison, but they're they're they're very comparable to how they used to be. So we're we're pleased to see that. And then in terms of encouraging r and d here, I mean, you know, from from our point of view, you know, there there are there's there do seem to be issues with the MHRA. I think, you know, they're over they're understaffed, overstretched, slow to respond.

20:59 Yeah. We we we've we've had all sorts of problems with them, and I I so I understand that a a big review of MHRA is is ongoing, and, obviously, we will be telling our story to the BIA and and and other lobbying groups to make sure that the government understand the problems we've had. Okay. Great. There's a question on the Australian subsidiary. Can you elaborate a little bit more give a little bit more detail where is it, what type of entity it is, and what's it called? Yeah. So the the the name of the Australian company, subsidiary is, Pampersford p t y limited. It's registered in Victoria, and and it's it's it's basically it it's a PO box, essentially. I mean, it has it has directors, and it has a an existence, but it's purely there to enable us to claim the Australian tax credits, which I think we noticed in noted in the results statements are are rather generous 43 and a half percent. But to do that, you need to have you you you need to bill the expenses in Australia through a company that's registered in Australia, so we set them up to do that.

22:14 Great. More on Australia. What is the process of patient recruitment in Australia and their timing thereof? Do we have a hospital lined up? We have a clinical unit lined up for the phase one a trial, so that will be in healthy subjects, so not performed in a hospital, although it is actually on the grounds of a hospital, which is very good from a, you know, safety point of view. So the all of these clinical units have recruitment processes, which involves large databases of volunteers who have already registered with the clinical unit. They've registered an interest in taking part in clinical trials in general. So what the recruiters do is is go through that database. They're searching for people who are suitable, you know, who meet the requirements to be included in our clinical trial.

23:08 In addition, in in Australia, they can do lots of advertising using social media to look for volunteers for these trials. So I think for the healthy subjects portion, again, not anticipating any particular delays due to recruitment. You know, let's let's get into the trial and see how that pans out. But certainly at the moment, we're reassured that there won't be delays for the patient part of the trial. So we'll be working with dermatology clinics who will be referring patients again suitable for inclusion in the in the trial to the to the unit where the trial will take place. So again, it's not in a hospital, but it is of course accessing patients through the dermatology clinics.

23:59 Great. Thank you. And that was that was one of the another attraction of taking the trial to Australia is this availability of psoriasis patients. Couple of questions on the MHRA again. So what will happen to the costs incurred for The UK CTA? Will it be refunded? Well, so so there's no application as such to submit the MHRA, so there's no there there are no actual cost to be refunded. Okay. If the MHRA do respond and ultimately accept our submission, would we run trials in both territories, or are we now putting all our eggs in the Australia basket?

24:46 For the certainly for the Phase 1a trial, all our eggs are in the Australia basket. When it comes to expanding the trial for Phase 1b, so you know, let's never close any doors. It's possible that we could look for patients in other disease areas in The UK or in other European territories. Certainly not the plan at the moment, but I wouldn't want to close any doors. But you know, the trial will be performed in Australia. That's the plan. The the MHRA application is is is over, I think. Okay. Great. Okay. So just moving on to SDC 18 o two. At what stage are the translational toxicology and manufacturing studies, and when do you expect the respective stages to be concluded?

25:43 So we haven't given timelines for any of those things. The translational studies are in progress. It's it's an involved process. And I would add that, obviously, STC 18 o one has been our priority in all of this. So eighteen oh two has necessarily taken a backseat there. Translational studies are in progress. Once those are complete and we're satisfied that we have a, you know, a good data pack with respect to potential efficacy of a molecule, then we'll be beginning the toxicology studies. We have done some short term acute tox studies with the molecule, all of which were fine. But we'd need to get into the actual GLP toxicology studies to support clinical trials application, wherever that may be.

26:34 Manufacturing also, we've not started, but certainly some of the steps are repeats of chemical synthesis steps used for the production of SDC 18 o one. So I think we'd be able to get going very quickly on the actual manufacture of 18 o two. Okay. Also on 18 o two, will you look to perform clinical trials for 18 o two in Australia as well given the disappointing lack of communication from the relevant authorities in The UK? I think it's too early to say. I mean, obviously, eighteen o two will begin clinical trials in patients. So Australia has really built a very strong position in first in human studies in healthy subjects.

27:29 I don't necessarily know of any particular advantages they have when it comes to patients. So we'll be assessing all the possibilities, obviously, mindful of our experience with MHRA in the past, which may guide our thinking. But I think, yeah, at the moment, we're open minded, and it will be quite a different Phase one clinical trial to that envisaged for eighteen oh K. Moving on to SRA seven thirty seven. Do you expect there to be any change to SAREUM's existing 27 and a half percent share in any future deal? No. I suppose I mean, yeah, yeah. And and and looking at potential things that could happen to that, I suppose, you know, if we were to fund some further developments and other clinical trial independent of CPF, we would have invested more in the program, and therefore, we would expect to negotiate a higher percentage.

28:34 But, no, the the the as it stands, we yeah. Our our 27 and a half percent is maintained. Okay. Is there active interest in SRA seven thirty seven? And what time scale can we expect to see the next steps of its commercialization? So we have an a number of inquiries. We we received them CPF, I understand, of dealing with them, but we can't really comment on the the stage of these inquiries or or any timelines for them to complete. Great. Thank you. Just going back to eighteen o one. Do you have a rule of thumb for how much per patient the phase one a trial will cost? I mean, yes. I mean, well, we know how much it's gonna cost, and we know how many patients we're gonna recruit, but it's it's it's I suppose it's commercial confidential between us and the clinical unit.

29:30 Okay. Then there are a couple of questions relating to why the MHRA did not allow SAREUM to proceed with the trial. So so the MHRA requested some review of of some of the preclinical data we submitted to them through the the the UK GLP monitoring authority as the UK Good Laboratory Practice Monitoring Authority. So, yeah, which which wouldn't have been a problem. We we we're sure that the data would have stood up. But the the request to do this review had to have come from MHRA. So we asked MHRA to to make that request, but that that was pretty much the point they stopped responding.

30:19 So we were kind of we we're a bit stuck, really. The review couldn't go ahead without MHRA, requesting it, and MHRA were not responding to our request to to do that, and and that's that's where we kinda came to a stop with MHRA. Great. Just a couple have been sent in in advance. What is the cash burn likely going forwards? So we will not comment on that. Thank you very much. Okay. I think that is the majority of the questions that we've had through. Tim Tim, John, thank you. And I think you have addressed all those questions you can from investors. And, of course, the company will review all questions submitted today, and we will publish those responses on the investor meet company platform.

31:11 Perhaps before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Steven, could I please just ask you for a few closing comments? Yes. Indeed. Well, again, thank you all for for joining this call today. I hope it's been helpful to you. We do believe that we are very firmly in one of the most exciting periods of the company's history, and we will look forward to continuing to brief you and and keep you appraise of of progress. We do appreciate the commitment you shared to the company, and we do we do like and and mostly enjoy the comments and questions that you that you ask. So thank you again. And with that, we'll we'll bring things to a close.

32:00 Tim, John, Steven, thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure we will be greatly valued by the company. On behalf of the management team of SAREUM HOLDINGS PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.