AIM listed tiddler and cancer treatment developer Sareum Holdings caught my eye yesterday with a 153% increase or 0.95p to 1.58p. After rising sharply on strong volume to over 2p, it was forced to issue an RNS during the afternoon that “Sareum, the specialist cancer drug discovery business, has noted the recent significant rise in the Company’s share price and associated volume of shares traded. The Company can confirm that advanced stages of negotiations are taking place with a potential licencing partner which may or may not lead to a licencing agreement regarding one of the Company’s research programmes. “
Sareum first moved onto my radar in March 2011 when the company’s shares spurted up 170% to 3.25p on positive news from a pre-clinical (non human volunteer) study on its lead development candidate, a CHK 1 inhibitor for bowel cancer. The share price has ebbed away since then and the company raised £250,000 from a placing at 0.85p in June 2012. Hybridan recently issued a note to say that a licensing deal was 65% likely this year for its CHK1 candidate and with a cash balance of £490,000 after the placing ascribed a target price of 3.16p.
Sareum was founded in August 2003 by Dr Tim Mitchell, Dr David Williams and Dr John Reader as a spin out from Millennium Pharmaceuticals’ Structure-Based Discovery Department. Following an initial private investment, the company was successfully admitted to AIM in October 2004. In 2008, the company restructured its business to concentrate solely on its internal cancer drug discovery programmes.
Sareum is focusing research on drugs that target the biochemical processes which control cell growth and division in cancerous tumours.
Its lead development product is SAR-020106 that has been developed as a CHK1 inhibitor in conjunction with the Institute of Cancer Research and Cancer Research Technology. CHK1 is involved in regulating cell cycle checkpoint signals that are activated in response to DNA damage and DNA errors caused by defective replication.
In March 2011, Sareum said a colon cancer pre-clinical model study carried demonstrated that the combination of its collaboration Chk1 inhibitor, dosed via the oral route, in combination with a chemotherapeutic, gemcitabine, demonstrates a greater than two-fold reduction in cancer growth rate compared to treatment with the same dose of gemcitabine without the Chk1 inhibitor.
Further pre-clinical in-vivo studies for the programme show that the collaboration Chk1 inhibitor, dosed alone, can reduce cancer growth in models of AML (acute myeloid leukaemia) and neuroblastoma (a childhood cancer). Certain cancers, such as these, are believed to be dependent on Chk1 for survival.
Investors should be wary. Sareum has a history of placing new shares after good news and the RNS yesterday though positive states clearly a licensing deal has not yet been done. The last placing was at 0.85p, so institutions have already doubled their money and may be seeking to realise some of this profit. Those who got caught up in the euphoria in march 2011 when the shares went above 3p and didn’t take profits have had a painful year, don’t get greedy this time around with the shares currently 1.6p to sell at the open!
Contrarian investor UK
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