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Sareum Shares Plunged 32% As Sierra Oncology Returns SRA737

Simon Mugo trader
Updated 12 Oct 2022

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Key points:

  • Sareum shares plunged 32% after Sierra Oncology returned SRA737.
  • The company was hoping that GSK would continue developing the drug.
  • Sareum indicated that it would keep working on the drug molecule.

The Sareum Holdings Plc (LON: SAR) share price plunged 32% after Sierra Oncology, a subsidiary of global pharmaceutical giant GSK, announced that it would return the rights for SRA737 to the CRT Pioneer Fund LP (CPF). Investors were disappointed that GSK had chosen not to develop the promising cancer drug.

GSK acquired Sierra Oncology in June 2022 for $1.9 billion, filling many with hope that the pharma giant would continue developing the SRA737 cancer drug molecule given its significant cash reserves compared to other smaller firms. CPF acquired the worldwide commercial rights to the drug molecule in 2013 after signing a co-development contract with Sareum.

Also read: Five Best Pharmaceutical Stocks To Watch In 2022.

Sareum is set to benefit from the commercialisation of SRA737, but the treatment still has a long path ahead. Sierra had taken the drug through Phase I/II clinical trials that assessed its efficacy and safety and had presented positive efficacy and safety data from the trials at the 2019 ASCO Annual meeting.

SRA737 is a clinical-stage, oral, selective Checkpoint kinase 1 inhibitor focused on curtailing cancer cell replication and repairing damaged DNA. The drug was discovered by Sareum and scientists from the Institute of Cancer Research. Cancer Research UK and Sareum funded the program.

Given that CPF acquired the worldwide rights to the drug candidate in 2013, its been almost ten years, and the drug is not close to being commercialised. So maybe GSK weighed its options by looking at the available data and decided not to proceed with its development.

Sierra Oncology’s decision to return the drug to CPF may make it challenging for CPF to license the drug to another firm, given that a pharma giant refused to proceed with its development. However, only time will tell if the drug can find another interested party to take it through the clinical development stages and, hopefully, its approval.

Tim Mitchell, Sareum’s CEO, commented: “We continue to believe that SRA737 has great potential in several oncology applications, and Sareum now has the opportunity to be involved in planning its future development, supported by the positive clinical studies previously undertaken by Sierra.”

*This is not investment advice.

Sareum share price.

Sareum share price 12-10-2022
Source: Tradingview

Sareum shares plunged 31.98% to trade at 134p, falling from Tuesday’s price of 197p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading