Research note


Saniona: updates from spin-out company’s

Saniona’s spin-outs, Initiator Pharma and Scandion Oncology, had an active day during the Thursday.

We learned earlier this morning that Saniona and Initiator Pharma has entered into a one-year option agreement in which Initiator Pharma obtains the right to acquire the AN788 program. AN788 was in-licensed from Neurosearch in 2012 and is positioned as potential drug therapy for depression and anxiety. As Saniona’s current focus is not within these fields, we think it has a clear rationale for Initiator Pharma to take over this program. AN788 is not part of our Sum-of-the-parts valuation, and the agreement will not trigger any payments to Saniona. However, Saniona will still have an interest in the development of AN788. They are entitled to receive 20 percent of future payments to Initiator Pharma (based on potential out-licensing agreements between Initiator Pharma and third party) and single digit royalties (based on product sales).

On Thursday, it was the first trading of Scandion Oncology’s shares on Spotlight Stock Market. Scandion Oncology develops drugs to overcome chemotherapy resistance. Their lead compound, SCO-101 is about to start phase II studies in patients with metastatic breast cancer. The phase II study is divided into two parts. The first part will enroll 12 patients and measures will include safety, tolerability, and efficacy when combined with chemotherapy. The second part is a proof-of-concept study and will enroll 15 patients, of which six of them will be recruited from the patient group in the first part of the study. Read-out from the trials is expected in Q4’20.

In conjunction to Scanion Oncology’s IPO, the company successfully raised SEK 26 million in a rights issue; it got oversubscribed by over 400 percent. The largest part of the capital from the issuance will be used to fund the first part of the phase II study.

Due to a successful first day of trading for Scandion Oncology’s shares, Saniona’s almost 30 percent stake has currently a market value of approximately SEK 30 million. 90 percent of Saniona’s shares are subject to a lock-up period of 12 months.

We argue that the holding in Scandion Oncology serves as a cushion to our overall valuation of Saniona. Even though we believe the holding should be seen as a long-term strategic investment, it is hard not to argue that it, also in the long-term, could potentially be a source of capital for Saniona’s core business. We know that Saniona is a responsible and long-term owner of its spin-outs so we would believe that could materialize if they would find another long-term owner in a block sale.

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