Key points:
- The Sareum share price has fallen 46.3% from its April high.
- The decline was triggered by a lack of news from the biotech firm.
- So should you buy Sareum shares? Read on to find out.
The Sareum Holdings Plc (LON: SAR) share price has fallen 46.3% from its April high that followed a parabolic rally triggered by its connection to Sierra Oncology, which GSK acquired for $1.9 billion.
While GSK’s primary interest in Sierra Oncology was momelotinib, a drug meant to treat myelofibrosis after Sierra Oncology reported positive Phase III topline results in January 2022, the company has another drug known as SRA737, which it has licensed from Sareum.
Also read: The Best Biotech Penny Stocks Under $5 To Buy Right Now.
Sareum pointed out the SRA737 was developed by its scientists in collaboration with The Institute of Cancer Research and that it is eligible to receive a 27.5% share of any future milestone payments. In addition, Sierra Oncology signed a revised licensing deal with CRT Pioneer Fund LP in November 2020, giving Sareum a share of future milestone payments and royalties.
However, given that GSK’s main reason for the acquisition was momelotinib, there are no guarantees that the leading pharmaceutical company will allocate resources to developing SRA737. This novel Chk1 inhibitor can treat hematologic and solid tumours.
Investors initially cheered the announcement in April, leading to the parabolic rally shown below. Still, as we all know, such rallies are usually followed by significant pullbacks, which occurred as expected.
The appointment of Sareum’s executive chairman to a similar role with another UK biotech company Midatech Pharma in June also did not sit well with investors, given that both companies operate in the same sphere, which could create conflicts of interest.
Since April, there have not been much in announcements from Sareum after the company was awarded an EU patent for its proprietary SDC-1802 TYK2/JAK1 inhibitor program for treating t-cell acute lymphoblastic leukaemia in April.
Still, the biotech company has a strong pipeline of drugs in various development stages, making it an attractive play among UK biotech shares. However, I wouldn’t buy Sareum shares now due to the prevailing market conditions that do not favour growth and biotech stocks, which have sold off this year.
Sareum shares are down 20.6% in 2022, while GSK’s is up 12.3%.
*This is not investment advice. Always do your due diligence before making investment decisions.
Sareum share price.
The Sareum share price has fallen 46.37% from its April high of 345.0p to its current price of 185.0p.