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New 2017-2021 strategy to boost R&D

Outlook | Pharmaceutical & healthcare | 28 Nov 2017

Selvita offers a two-pronged strategy with steady double digit growth from its drug discovery business coupled with potential upside from drug development within its broad R&D pipeline. Recently the company introduced a new strategy for 2017-2021 focused on continuing growth in the Services business and ramping up investment in the internal R&D pipeline. While this has been overshadowed somewhat by the clinical hold on the lead asset SEL24, our investment thesis for Selvita is based on supportive long-term company-specific and macro trends and we increase our valuation from PLN577m to PLN1.04bn or PLN75/share.

BioLight Life Sciences

Binding agreement reached to sell IOPtima

Update | Pharmaceutical & healthcare | 28 Nov 2017

BioLight’s subsidiary IOPtima Ltd (of which BioLight holds a 70% ownership stake) entered into a binding agreement for it to be acquired in a four-stage process by Chengdu Kanghong Pharmaceutical Group Co. (Chengdu). The total cash proceeds that BioLight is anticipated to receive, by mid-2021, would be between $23m and $27.3m; we estimate it would receive about $12m by mid-2018. We now obtain an rNPV valuation of NIS112.5-134.3m (up from NIS109.7-130.7m, previously).


Phase I/II with SEL24 to continue

Update | Pharmaceutical & healthcare | 21 Dec 2017

On 16 December 2017, Selvita announced that the FDA had lifted the clinical hold on the Phase I/II clinical trial with the company’s lead drug candidate SEL24 (dual PIM/FLT3 kinase inhibitor) for refractory/relapsed acute myeloid leukaemia (r/r AML). The asset is now out-licensed to Menarini Group, therefore the two companies worked together with the FDA to resolve the issues. The trial can now be restarted with some modifications to the design. While only few details have been disclosed, Selvita mentioned that the dose-finding scheme will be revised to the usual “3+3” design and the trial will resume.


Clinical hold on SEL24

Flash note | Pharmaceutical & healthcare | 09 Oct 2017

On 7 October 2017, Selvita announced that the FDA has placed a full clinical hold on the company’s open-label, dose escalation Phase I/II clinical trial with SEL24 (dual PIM/FLT3 kinase inhibitor) in patients with relapsed/refractory acute myeloid leukemia (r/r AML). The decision was based on a fatal haemorrhagic stroke after venous thrombosis in one patient enrolled in the last cohort 5 in part 1 of the study designed to establish the recommended dose. The adverse event was classified as possibly related to the study treatment, which prompted the FDA to issue the clinical hold.


Menarini Group in-licensed SEL24

Flash note | Pharmaceutical & healthcare | 28 Mar 2017

Today Selvita announced that it has out-licensed its lead asset SEL24 (dual PIM/FLT3 kinase inhibitor) to Menarini Group making it the first deal for a proprietary clinical-stage asset. Selvita will be responsible for the continuation of the current Phase I/II trial for acute myeloid leukaemia (AML) with the first patient enrolled earlier this month until the estimated takeover of the trial by Menarini at end-2017. Furthermore, both companies will collaborate on additional preclinical research on PIM/FLT3 targets. The upfront payment is €4.8m, with Selvita eligible for a total of €89.1m in potential milestone payments, and non-specified single to low-double digit royalties and cost sharing.


SEL24 enters Phase I/II

Outlook | Pharmaceutical & healthcare | 20 Mar 2017

Selvita delivered on both fronts in 2016. We expect sales to have grown a solid 21% y-o-y, with an R&D milestone met and the FDA accepting an investigational new drug application for the company's lead drug candidate, SEL24, which now proceeds through Phase I/II. We have increased our valuation to PLN577m, which includes the first stage of Selvita's long-term expansion plans. Continued organic growth and potential collaboration deals for Selvita's innovation platform are likely catalysts in 2017.


Good Q316 results; green light for expansion

Update | Pharmaceutical & healthcare | 22 Nov 2016

Selvita continued to deliver organic growth in Q316, with further significant addition to profits from a one-off gain after the sale of assets connected with the Nodthera formation earlier in summer. Following the approval of the first step of long-term expansion plans at the extraordinary general meeting on 25 October, we now include them in our model. This is the main driver behind the increase in our valuation to PLN427m or PLN32/share.


Continuous growth fuels capacity expansion

Update | Pharmaceutical & healthcare | 14 Oct 2016

Selvita delivered strong overall organic growth in Q216, while the mid-year backlog supports our estimated double-digit sales growth in 2016. The company is accelerating its capacity expansion with a new long-term research facility development project. If this goes according to plan, the total number of employees could be boosted by c 1,000 from the current 368 over the next 10 years. The progress of lead R&D product SEL24 into Phase I and the formation of Nodthera (Selvita's inflammasome inhibitor technology) were other recent highlights. We value Selvita at PLN376m.


SEL24 moves to clinic; Nodthera established

Update | Pharmaceutical & healthcare | 22 Aug 2016

Selvita announced last week that the FDA has accepted the initial new drug application (IND) for its lead R&D project SEL24, which can now proceed to Phase I/II in acute myeloid leukaemia (AML) patients. This is the first of Selvita's R&D assets to be tested in the clinical study that the company intends to begin in Q416, in line with our expectations (H216), while the design of the trial has not yet been disclosed. Upcoming H116 report to be released on 30 August will provide an update on the company's operational performance. Our valuation is under review.


Strong Q116, good order book for 2016

Update | Pharmaceutical & healthcare | 17 Jun 2016

Selvita's strong Q116 results and expanding order book point to a good year. Our estimates are largely unchanged, forecasting double-digit organic sales growth in 2016 and 2017. The FDA's request of supplemental preclinical documentation for SEL24's IND application may delay the start of the Phase I trial previously scheduled for Q316. Selvita will announce more details in due course; currently our R&D timelines are unchanged, with our valuation increased slightly to PLN 363m.


Fruitful partnership with Merck KGaA

Update | Pharmaceutical & healthcare | 25 Apr 2016

2016 has started on a positive note for Selvita with FY15 results showing excellent organic growth and a second R&D development deal with Merck KGaA announced at the end of March. With solid service revenue growth expected to continue, the R&D pipeline is progressing and lead-product SEL24 should enter Phase I by mid-2016. Other potential catalysts during the next 18-24 months include possible partnership deals for SEL24 or SEL120 and new drug development deals from existing collaborations with H3 Biomedicine and Merck. We raise our valuation to PLN354m (vs PLN333m previously), or PLN27 per share (was PLN25.4).


Emerging biotech player

Outlook | Pharmaceutical & healthcare | 09 Dec 2015

2016 could be a transformational year as in-house oncology drugs move into Phase I. A fresh Merck KGaA deal could add new candidates to the oncology pipeline. This and continued collaborations help maintain strong service revenues. SEL24 will enter Phase I in H216 (dosing expected to begin in July 2016) thereby bringing it closer to a potential deal. Our fair value has increased from PLN275m to PLN333m (from PLN21 to PLN25.4 per share) due to improved operational performance, internal programme advancement, addition of new partnering programmes and cash position.