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New 2017-2021 strategy to boost R&D

Outlook | Pharmaceuticals & 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 | Pharmaceuticals & 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).


SEL120 to enter clinical development in 2019

Outlook | Pharmaceuticals & healthcare | 18 Jan 2019

The data readout from the SEL24 Phase I/II trial in relapsed/refractory AML and the second lead asset, SEL120, moving into clinical development next year are milestones in Selvita’s internal drug R&D. This should accelerate, as the company’s plans to focus on innovation were endorsed by shareholders during the fund-raise earlier in 2018. R&D progress across the earlier-stage pipeline has been reported in several publications in recent months. The Innovations Platform continues to receive support from Selvita’s rapidly growing drug discovery services business. Our valuation is PLN1.24bn or PLN77.6/share.


Progress across pipeline; Services sales up 53%

Update | Pharmaceuticals & healthcare | 29 Jun 2018

Over the past several months Selvita has been executing on its new R&D-focused multi-year strategy funded by the share issue in March 2018 raising PLN134m and other sources. While sales continue to grow at an impressive rate in the Services business (up 53% in Q118), R&D progress across the pipeline has been reported in several publications in recent months. Our Selvita valuation is PLN1.30bn or PLN81.2/share versus PLN81.7/share previously.


New funds enable expanded R&D programme

Update | Pharmaceuticals & healthcare | 16 Apr 2018

Selvita’s FY17 revenues were PLN105.9m, up 59% y-o-y, with adjusted operating profit rising from PLN4.7m to PLN13.2m. This reflects strong organic growth, but profitability was also boosted by the SEL24 out-licensing deal to the Menarini Group, which contributed PLN13.0m to profit. The share issue completed in February 2018 raised PLN134m gross. This new money and funds from additional sources will support Selvita’s new R&D-focused strategy, which we have already included in our model. Our updated valuation is slightly higher at PLN1.30bn or PLN81.7/share.


Phase I/II with SEL24 to continue

Update | Pharmaceuticals & 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 | Pharmaceuticals & 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 | Pharmaceuticals & 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 | Pharmaceuticals & 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 | Pharmaceuticals & 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 | Pharmaceuticals & 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 | Pharmaceuticals & 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.