e-therapeutics

New insights from Parkinson’s disease collaboration

Update / 6 December 2018

Share this note

Promising early results from the C4X Discovery (C4XD) collaboration, initiated in May 2018, highlight the flexibility of e-therapeutics’ network-driven drug discovery (NDD) approach, and its applicability to drug discovery for complex diseases. NDD analysis of Parkinson’s disease (PD) associated genes identified both known and potential new biological mechanisms. This is a first demonstration of the ability of the NDD platform to extract insights from genomic data and link them to potential new targets and pathways for drug discovery. While further work is necessary to explore this more fully in PD (and other diseases), it could provide another facet to e-therapeutics’ business development discussions. We continue to value e-therapeutics at £53.8m (20.4p/share) and anticipate one or more NDD-based deals in the next 12 months.

Year-end: December201720182019E2020E
Sales (£m)0.0 0.0 0.0 0.0
Adj. PBT (£m) (13.4)(6.7) (5.4) (4.4)
Net Income (£m)(13.1) (5.4) (4.3) (3.6)
Adj. EPS (p)(3.9)(2.0) (1.6) (1.3)
Cash (£m)14.0 9.65.2 2.1
EBITDA (£m)(13.7) (6.7) (5.4) (4.4)
Source: Trinity Delta Note: Adjusted numbers exclude exceptionals.
  • Important validation for the NDD approach e-therapeutics’ NDD analysis of c200 PD-associated genes (identified by C4XD’s Taxonomy3 genomics platform) has successfully identified both known and novel biological mechanisms underlying PD. As neurology was not a focus for e-therapeutics prior to May 2018, these new findings underscore the flexibility and broad applicability of its NDD platform.
  • Another string to the NDD bow? While early, these initial results are meaningful, suggesting that NDD can extract actionable insights from complex genetic data (known and novel mechanisms), and employ this understanding to predict which drug-like small molecules could be used as the starting point for drug discovery. It could also be used to understand, from genetic data, which disease mechanisms may be most important. Further confirmatory data are needed, but there is a rationale in applying the NDD platform to other complex polygenic diseases in neurology and beyond.
  • Focus remains on business development The H119 results statement confirmed detailed discussions are ongoing with several potential large biopharma partners for NDD-based programmes and projects, including with over half of the top 25 global pharma companies. The new findings in PD should augment its commercial offering and may interest potential partners. Broader corporate development opportunities are also being evaluated, including non-dilutive sources of capital (risk-sharing deals to progress discovery projects), and prospects for inorganic growth.
  • Sufficient cash to operate into 2020 We have updated our forecasts to reflect the ongoing tight cost control (while still investing in the core NDD platform) shown in H119. Management have guided that end-July 2018 cash of £7.6m is sufficient to operate into 2020 (FY21). We would view additional funding from a deal or other sources positively as it would enable optimal investment in its platform and discovery assets. We maintain our valuation at £53.8m or 20.4p/share.

Update

6 December 2018

Price6.625p
Market Cap£17.8m
Enterprise Value£10.2m
Shares in issue268.6m
12 month range5.8p-10.4p
Free float28%
Primary exchangeAIM London
Other exchangesNA
SectorHealthcare
Company CodeETX
Corporate clientYes

Company description

e-Therapeutics is a drug discovery company with a proprietary network driven drug discovery (NDD) platform. Following management changes and a strategic review in 2017, the focus is now on optimising its discovery processes and platform, and securing industry collaborations and partners for its projects.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 20 3637 5043

Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5043

 

Exhibit 1: Summary of financials
Source: e-therapeutics, Trinity Delta  Note: Adjusted numbers exclude exceptionals.

Disclaimer

Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publically available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.

Copyright 2018 Trinity Delta Research Limited. All rights reserved.