4SC’s new core strategy revealed earlier this year has focused on dermato-oncological indications, while its assets for other indications are partnered. The sharp focus will allow 4SC to become an expert in the field and to accumulate commercial know-how, as the company intends to market the core assets (resminostat, 4SC-202 and 4SC-208) in orphan indications on its own. A successful fund-raise in July means that the company now has sufficient funds until 2020 and past several important R&D events. We have overhauled our model to reflect 4SC’s new strategy and our new valuation is €344m or €11.2/share.
Resminostat is an orally administered histone deacetylase (HDAC) inhibitor, which could act as a monotherapy or in combination with other anti-cancer drugs. 4SC’s pivotal trial RESMAIN is evaluating resminostat in a novel indication – maintenance treatment of patients with advanced-stage cutaneous T-cell lymphoma (CTCL) who have achieved disease control with prior therapy. Top-line results are expected in H119 and if positive it could be the first HDAC inhibitor available for CTCL in Europe, but more importantly the maintenance treatment indication would be unique, potentially offering a competitive edge in Europe and the US. Resminostat is partnered with Yakult Honsha in Japan, where most recently a Phase II study in first-line HCC and a Phase I study in biliary tract cancer have been completed.
4SC-202 and 4SC-208 are 4SC’s two other core portfolio assets in earlier stages, also for dermatological cancers: melanoma (Phase II ready, 4SC-202), Merkel-cell carcinoma (MCC, pivotal stage after melanoma study, 4SC-202) and Basal cell carcinoma (BCC, preclinical stage, 4SC-208). 4SC-202 is a specific HDAC Class I inhibitor positioned to be used in combination with checkpoint inhibitors. 4SC-208 specifically targets two kinases that are crucial for Hedgehog/GLI signalling pathway and acts more downstream than other agents. In indications like BCC, 4SC-208 has the potential to address the key issue of relapse after currently approved therapies. 4SC plans to complete preclinical development and start clinical trials in 2019.
Our updated rNPV stands at €344m (vs €124m previously) after revising our model in accordance with the new 4SC strategy enabled by the substantial fund-raise in July. We forecast cash reach into 2020 and expect a number of potential inflection points over the next three years, including data read-out of its CTCL resminostat trial and application for marketing authorisation; data read-outs from several Phase II 4SC-202 trials and initiation of a pivotal trial in MCC.