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Specialist drug developer Sareum (LSE:SAR) has updated investors on its progress with a range of treatments the company is currently working on. This includes small molecule therapeutics to improve the treatment of cancers and auto-immune diseases. But its real interest at the moment is its COVID treatment project.

Sareum said in its latest trading update that Covid-19 continues to impact the Contract Research Organisations with which the company is working to complete the preclinical development of SDC-1801 for autoimmune disease. While initially the impact on development timelines was minimal, it has increased and is causing further delays to the conduct of the final preclinical studies Sareum needs to complete on SDC-1801 prior to filing an exploratory Clinical Trial Application (CTA).

Sareum shares have been on a generally upward trend since late April. The company is attracting the most investor interest due to the applications of its SDC-1801 project in the treatment of lung inflammation symptoms in COVID. Ironically it is the pandemic that is also delaying some of its research work. Shares in Sareum have slipped a little recently however. News of the delays have prompted some selling activity and the stock dropped from 2.74 to 2.53.

Toxicity and safety studies to complete Q3 2021

As a result of these delays, Sareum says it now expects these final toxicity and safety studies to complete in Q3 2021 and a CTA for SDC-1801 to be filed in Q4, subject to no further delays. Sareum had previously guided that the filing of the CTA was expected mid-year 2021. Should the CTA be filed in Q4 2021, this may enable it to commence first clinical trials in early 2022, subject to financing.

The UKRI-funded Covid-19 research project for SDC-1801 is expected to complete on schedule with the experimental phases finishing in June and the data analysis to complete shortly thereafter. Sareum says it will provide a further update once the relevant data are available.

Initial results from this research are encouraging and demonstrate that SDC-1801 reduces the levels of cytokines associated with Acute Respiratory Distress Syndrome in human lung cells infected with SARS-CoV-2.

Listen: Podcast with Ailsa Craig of the International Biotechnology Trust

Further government funding under consideration

If the completed studies are successful, Sareum says it plans to explore the possibility for further UK government funding from the recently launched AGILE clinical development platform, which has been established to fund Phase 1 trials and fast-track the development of potentially ground-breaking Covid-19 treatments. These activities are expected to run in parallel with the broader SDC-1801 development plan.

Sareum continues to work on the design of the translational studies needed to define the optimal cancer application prior to completing toxicology and manufacturing studies.

“The delays in completing the preclinical data package for SDC-1801, prior to our planned filing to begin clinical studies, are an unfortunate consequence of the current pandemic environment that is affecting many organisations,” said CEO Tim Mitchell. “Despite these delays, we continue to work diligently towards this important milestone for this novel and promising candidate and are targeting CTA filing in Q4 2021 to enable first clinical trials to commence early in 2022, subject to financing.”

Mitchell said that positive results, that confirm Sareum’s early findings, will enable the company to explore further opportunities to develop SDC-1801 in this indication, in parallel with the broader autoimmune programme.

Our thoughts on Sareum

A very interesting medical R&D small cap. Investor interest in SDC-1801 is obviously based around its application in the treatment of COVID symptoms. It is attacking the issue from a different perspective from vaccines and would be less affected by variants and mutations. With COVID looking like it will be around for the longer term, an effective treatment that can save lives once patients are admitted to hospitals, would be gold dust frankly.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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