4SC has announced positive Phase II results from a more detailed analysis of the HCC Yakult Phase II trial data, which we believe could lead to further clinical development. It has also recently announced the sale of its immunology portfolio (Vidofludimus and a cytokine inhibitor), which further streamlines the company’s focus further on its core business of epigenetics while retaining potential upside (via milestones and royalties). We increase our rNPV to €117m from €110m to reflect the increase in potential of resminostat development in Japan.
Positive potential following further analysis
Despite not meeting the primary end point previously, further in-depth analysis of the HCC Phase II clinical trial data, conducted by its partner Yakult, has reportedly demonstrated a substantial improvement in overall survival (OS). 4SC has reported that this is an important end point in advanced HCC and that this improvement was in a large subgroup, defined by greater than median platelet count at study entry (50% of all patients in the study). As a result, of this positive further analysis, plans for continued clinical development of resminostat in Japan are being discussed.
Recent deal enables greater focus on core
4SC also recently announced the disposal of its immunology portfolio to Immunic, which includes two drug development programmes (Vidofludimus and a cytokine inhibitor) and its associated IP. The deal included an upfront payment, milestones and royalties, although it does not give any further details. While the deal is not transformative in terms of its impact on cash, it does streamline focus further on 4SC’s core business of epigenetic research and treatments whilst retaining upside.
CEO appointment underpins the next stage for 4SC
Dr Jason Loveridge has recently been appointed CEO. He has an investmentfocused background which should prove useful in driving forward partnerships and delivering future fund-raising requirements and value from its core business.
Valuation: Increased to €117m
We have increased our rNPV-based valuation to €117m or €6.2 per share (previously €5.8), as we have raised our probability of resminostat in Japan to 20%. We will review this again with clarity of timing and details of further clinical development of resminostat in Asia. We have not altered our forecasts as the company has guided that the recent deal with Immunic does not affect cash guidance and we do not have clarity on the details of the deal.