e-therapeutics

Progress in all areas, and a longer cash runway

Lighthouse | 4 October 2018

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  • e-therapeutics’ operational update for H119 (six months to July 2018) highlighted progress in strengthening the NDD (network-driven drug discovery) platform; business development activities; and drug discovery programmes.
  • NDD platform enhancements include the addition of new modules for patient segmentation and informatics-based mechanism of action.
  • Incorporation of technology from the partnerships with Intelligens (neural networks) and Biorelate (natural language processing) has bolstered e-Therapeutics’ AI (artificial intelligence) capabilities.
  • A collaboration with C4X Discovery was signed in May to identify novel cellular mechanisms for Parkinson’s disease to assist in development of new treatments.
  • Importantly, the company is in detailed discussions with many potential large biopharma partners for NDD-based programmes and projects, having had in-depth discussions with over half of the top 25 biopharmaceutical companies.
  • It has also been shortlisted as preferred partner by a number of these as part of their AI/machine learning/in silico technology selection exercises, as more companies look to use the various technologies to bolster their productivity.
  • Internal immuno-oncology (IO) programmes (tryptophan catabolism and checkpoint signalling modulation) are advancing well, and a new generation of commercially attractive NDD-derived projects have been created in fibrosis, IO and neurodegeneration.
  • Careful control of costs, while still investing in the core NDD platform, resulted in a reduced operating loss of £2.8m during the six months to July 2018 (vs £3.7m in the same period last year).
  • Cash of £7.6m at H119 (vs £9.6m at end-January 2018) will, management now believes, enable the company to operate into 2020.

Trinity Delta view: e-therapeutics’ remains focused on its goal of securing business development deals on its NDD platform and assets, and appears to have made significant progress towards securing a partnering deal with a major pharmaceutical company. We believe that if it signs a significant collaboration agreement with one of the big pharma companies, this could lead to further deals being secured. 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.


Tight cost control and extension of the cash runway into 2020 strengthens e-therapeutics’ negotiating position, making it more likely that the company will secure lucrative strategic deals. Cash inflows from a deal or other sources would enable optimal investment in its platform and discovery assets.


The underlying operating cash burn (before tax credits) of £3.4m was lower than our forecast, so are reviewing our estimates, taking into account management’s guidance that e-therapeutics could operate into 2020 (FY21) without raising additional cash.

 

Lighthouse

4 October 2018

Price (p)7.40
Market Cap (£m)19.88
Primary exchangeAIM London
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, the focus is on its immuno-oncology projects, the next generation of the platform, and on securing industry collaborations and partners.

Analysts

Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5042

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

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