During the Q218 results call, 4SC management announced that with current funds, it plans to initiate some of its additional domatinostat trials including the pivotal Merkel-cell carcinoma (MCC) study and a Phase II skin cancer checkpoint combination study. 4SC will provide further detail in H218. The SENSITIZE study (Phase Ib/II, melanoma) is on track in Europe (data H119), while a new IND will allow expansion of the study into the US in 2019. The EMERGE study (Phase II, GI cancers) is now expected to initiate in Q318 (previously H118). The multiple domatinostat studies in H218/H119 will provide several R&D catalysts while investors wait for pivotal RESMAIN study data. Enrolment for the RESMAIN study (CTCL) continues in Europe and Japan (100/150 patients by end-2018), and top-line data are now expected in H219 (previously H119). Due to this modest delay, we now forecast resminostat launch in 2021 (previously 2020), and therefore slightly lower our valuation to €327m or €10.7/share (vs €11.4/share).
With current funds, management plans to initiate at least two additional checkpoint combination studies, which will include the pivotal MCC study and the Phase II skin cancer checkpoint combination study (lead-in for the MCC study). Further detail will be provided to investors later in 2018. We expect 4SC’s domatinostat programme to become more significant in H218 with multiple catalysts in the period: publication of a data set from the SENSITIZE study (first dose cohort) including safety, efficacy and biological data; initiation of the EMERGE study; fresh preclinical checkpoint combination data; and initiation of an additional combination study.
In H118 the average cash burn was €1.2m/month, while management’s FY18 guidance stays at €1.8-2.0m/month, indicating increased cash burn in H218. For Q218, R&D costs were €4.3m vs €2.2m in Q217. We expect R&D costs to ramp up in H218 reflecting domatinostat trials. Net cash as of 30 June 2018 was €34.1m. 4SC continues to guide cash reach into 2020, providing a number of R&D catalysts.
We lower our rNPV-based valuation to €327m, or €10.7/share, from €348m (€11.4/share), due to the updated valuation for resminostat CTCL. We now expect resminostat to launch in 2021 vs 2020 following the announced modest delay in top-line data from the RESMAIN study, which are now due in H219 vs H119. A key near-term catalyst is first interim data from the SENSITIZE study (H218).