Sareum Holdings plc. Paper on lead candidate CHK1 published in high-impact journal. Update. 23 July 2015 HYBRIDAN LLP

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Bertha Young
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1 Update 23 July 2015 Key Statistics Code : SAR Listing : AIM Sector : Pharmaceuticals & Biotech Market Cap FD : 6m Shares in issue FD : 2,487.4m Current Price : mnth High/Low : 0.6p/0.205p Stock Performance /07/ /10/ /01/ /04/ /07/2015 Source: Fidessa Financials y/e Jun m FY 13A FY 14A FY 15E FY 16E Net Loss (0.5) (0.8) (1.5) (1.5) Source: Sareum Holdings Plc Annual Reports / RNS releases and Hybridan LLP estimates Company description An AIM-listed drug discovery company, Sareum Holdings Plc, focuses its research primarily on cancer and autoimmune diseases. Sareum currently has three lead research programmes progressing through preclinical testing, all of which are co-development collaborations with international partners. The Company leverages its proprietary technology platform, SKIL, to develop the majority of its research programmes, which are focused on novel small molecule drugs. HYBRIDAN LLP 20 Ironmonger Lane, London, EC2V 8EP Website: Derren Nathan Tel: derren.nathan@hybridan.com Paper on lead candidate CHK1 published in high-impact journal The specialist cancer drug discovery and development business has today announced that the discovery and biological characterisation of its lead candidate CHK1 inhibitor CCT has been published in the peerreviewed journal, Oncotarget. The paper describes how oral delivery of CCT boosts the effectiveness of conventional chemotherapies and could be used to treat lung and pancreatic cancers. This is not the first time the science behind the programme being co-funded by Sareum and the Cancer Research Technology Pioneer Fund has been flagged in eminent publications. In 2013 for example an article appeared in the International Journal of Radiation Oncology Biology Physics. However we understand this is the first time the clinical development candidate, CCT245737, has itself specifically been the subject of a publication. CHK1 is in the late stages of pre-clinical studies with submission of the Clinical Trial Application (CTA) anticipated to be filed in Q4. If successful this should allow for Phase 1 trials to begin in Q Hence this is an opportune time to catch the eye of larger pharma companies who may be prepared to pay a significant license fee in due course. Indeed Sareum s CEO, Dr. Tim Mitchell, commented: The publication of CCT data in this high-impact journal will bring what we believe to be a best-in-class drug candidate to the attention of our peers and potential licence partners. We are extremely encouraged by the wide ranging potential use for our CHK1 inhibitor either as a single agent or when dosed in combination with other chemotherapies. The preclinical studies are progressing well and we look forward to providing an update with our final results. Sareum s final results are typically published in October. Following the 1.4m fundraising at 0.25p in May, the company is sufficiently funded to meet its anticipated payment of 797,500 to co-fund the CHK1 Programme Phase I clinical trials. Shortly behind CHK 1 is Aurora+FLT3 Kinases targeting leukaemia & lymphoma with preclinical studies and clinical studies in China funded by Hebei Medical University Biomedical Engineering Center. We expect further preclinical data and a US patent grant this year. A CTA is targeted for mid-2016 as is a clinical trial by the end of Meanwhile preclinical work continues on TYK2 Kinase targeting autoimmune diseases in collaboration with SRI international. The nomination of a development candidate is likely within six months. In June, Sareum announced an award of up to 140k by Innovate UK to investigate TYK2 as a treatment for adolescent leukaemia. Our sum of the parts valuation of 1.21p suggests that the shares offer good value at present. A post phase 1 deal for CHK1 in itself could generate consideration, of which Sareum s 27.5% could be a multiple several times that of the current 6m market value. We caveat that the possibility that CHK1 is not approved for clinical trials is in our view the biggest short term risk to shareholder value. However whilst this would be disappointing, there remains potential significant value in Sareum s other two programmes. Conversely a successful CTA would generate scope for upside from our current valuation model. This recent publication provides a further endorsement of the science behind CHK1 which we hope will be mirrored in human patients. For analyst certification and other important disclosures, refer to the Disclosure Section

2 Financial Tables Profit & Loss Account Year-end June ( m) 2013A 2014A 2015E 2016E Sales Cost of Sales Gross Profit Other Operating Income R&D (0.3) (0.7) (0.8) (0.6) Expenditures (0.3) (0.3) (0.3) (0.3) Expenditures disc operations Total expenditures (0.6) (1.0) (1.1) (0.9) EBITDA (0.6) (0.9) (1.1) (0.9) Operating Profit/ Loss (0.6) (0.9) (1.1) (0.9) Finance income Finance Costs (0.1) 0.0 Share of associates (0.5) (0.8) Pre-tax Profit (0.6) (0.8) (1.7) (1.7) Taxation Profit/ Loss from operations (0.5) (0.8) (1.5) (1.5) Attributable Profit/ (Loss) (0.5) (0.8) (1.5) (1.5) PER SHARE DATA EPS - (p) (0.04) (0.05) (0.07) (0.06) Cash Flow Statement Year-end June ( m) 2013A 2014A 2015E 2016E Profit before Tax (0.6) (0.8) (1.7) (1.7) Dep and Amort Dec (Inc) trade/ other receivables (0.0) (0.0) (0.1) (0.1) Inc (Dec) in trade/ other payables (0.0) (0.1) (0.1) 0.0 Loss from associate Share Based Charges Taxation Finance Costs Finance Income (0.0) (0.0) Other Cashflow from operating activities (0.6) (0.8) (1.2) (0.8) Purchase of tangible fixed assets Purchase of intangible fixed assets Purchase of fixed asset investments 0.0 (0.8) 0.0 (0.8) Equity Swap Arrangement 0.0 (0.2) Interest received Cashflow from investing activities 0.0 (1.0) 0.1 (0.8) Financing Activities Issue of Ordinary Share Capital Share premium on issue of shares Repayment of borrowings Cashflow from Financing Activities Net increase (dec) in cash/ cash eq (0.1) (1.6) Cash and Cash equivalents (0.1) 2

3 Balance Sheet Year-end 30 June ( m) 2013A 2014A 2015E 2016E Non-current assets Intangible Assets Investments Property, plant and equipment Current assets Trade and other receivables Cash and equivalents (0.1) Investments Tax receivable Assets for disposal classed held for sale Total Assets Non-current Liabilities Financial liabilities Provisions Deferred tax Liabilities for disposal Current Trade and other payables (0.0) (0.0) Provisions Financial liabilities Other liabilities (0.0) (0.0) Total Liabilities (0.0) (0.0) Net Assets Shareholders' Equity Called up share capital Share premium Other reserves Retained profit/ loss (7.6) (8.3) (9.8) (11.3) Translation reserve Convertible loan note reserve Share based payment reserve Total Equity

4 Research Disclaimer This document should not be relied upon as being an impartial or objective assessment of the subject matter and is not deemed to be independent research for the purposes of the Financial Conduct Authority rules. As a consequence the research (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research (although Hybridan does impose restrictions on personal account dealing in the run up to publishing research as set out in our Conflicts of Interest Policy). Hybridan LLP is involved in providing other financial services to (the Company ) and as a result Hybridan LLP may have responsibilities that conflict with the interests of the persons who receive this document. 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