Ladies and gentlemen, welcome to [audio distortion] Attendees will be in listen-only mode. You can submit questions anytime just using the Q&A tab situated on the right-hand corner of your screen. I'd now like to hand over to Executive Chairman Dr. Stephen Parker. Good morning.
Good morning, ladies and gentlemen. Welcome to the Annual General Meeting of Sareum Holdings PLC. I'm Stephen Parker, Executive Chairman of the Board. A quorum of PLC members is present, and therefore we may now proceed with business. In common with recent Annual General Meetings, we've also opened the link through the Investor Meet Company site, in addition to the conventional meeting. I'm particularly grateful to those of you who have chosen to attend in person. We will deal with formal business at the meeting first, and there will be a presentation from Dr. John Reader, our Chief Scientific Officer, to provide an update on our research progress. We will then take questions from the floor in the usual manner for Annual General Meetings. Following these questions, we will try to cover some or all of the questions posted via the IMC site in the time remaining for the meeting. [audio distortion]
As our usual custom, answers to these questions posted on the IMC site will be published on the website in the minutes following the meeting. We have a lot to get through today, and I'd be grateful if you would follow the procedure and keep questions until the formal stages. I would now like to introduce the board, all of whom will be happy to take questions from you on their areas of responsibility. T o my far left, it's Clive Birch, who chairs the Audit and Risk Committee, John Reader, Chief Scientific Officer, Tim Mitchell, Chief Operating Officer, Mike Huynh, who chairs the Remuneration Committee, and our Finance Manager, Chris Neal, who is over on our side. I'd now like to start the formal proceedings of this Annual General Meeting. The notice of Annual General Meeting was posted to shareholders on the 17th of November 2025.
Accordingly, the requisite notice of the Annual General Meeting has been given. I propose therefore that, with your consent, the notice of Annual General Meeting should be taken as read. Thank you. Before proceeding with formal business of this meeting, I will now read a statement which was issued to the market this morning. The company has continued to advance its lead program, SDC-1801, following the successful completion of its phase I clinical trial in 2024. Despite a temporary setback with the discontinuation of the toxicology study, the company has made significant operational progress, including the appointment of a leading global contract research organization, and is now well positioned to restart its important studies towards advanced toxicology development. SDC-1801, Sareum's selective TYK2/JAK1 inhibitor, remains positioned as a potential taker for a range of autoimmune diseases, with an initial focus on psoriasis and autoimmune conditions affecting the skin. [audio distortion]
As previously announced, SDC-1801. P hase I clinical development. A randomized placebo-controlled trial demonstrated that SDC-1801 achieved blood plasma levels significantly exceeding the predicted therapeutic exposure with a half-life of 17-20 hours, supporting once-daily dosing and with a smooth delivery of drug over the dosing period. Importantly, no deaths or serious adverse events due to SDC-1801 were reported, and the frequency of adverse events, all mild or moderate, was similar in the active and placebo groups. Notably, SDC-1801 has not exhibited any of the potentially dose-limiting side effects that have been observed with leading dual TYK2/JAK1 inhibitors in clinical development, reinforcing the molecule's differentiated profile and best-in-class potential. Following successful completion of the clinical trial, two large-scale batches of SDC-1801 have been manufactured, one under GMP conditions for future planned clinical studies and a non-GMP batch for the phase II enabling toxicology studies.
Process chemistry improvements have enhanced the purity profile of SDC-1801 while maintaining good manufacturing yield. A program of work to optimize the capsule formulation of SDC-1801 is underway, aimed at enhancing drug release at higher doses and reducing the number of capsules required per dose in future clinical trials. Considerable progress has been made, and the company expects this project to conclude in Q1 2026. As announced on the 10th of December, -- sorry, I'm putting the 10th of October 2025, the company discontinued its 16-week GLP preclinical toxicology study for SDC-1801 following unexpected safety findings observed by a third-party provider of the study. These findings occurred at a higher incidence in control group animals that received an inactive dosing solution compared to those dosed with SDC-1801.
The company has now appointed a different lead global CRO with extensive experience in long-term toxicology studies to restart the phase II enabling toxicology program. Prior to commencing the full 16-week toxicology study, the company will conduct a separate pharmacokinetic study to evaluate four different formulations: three liquid formulations for gavage dosing and one capsule formulation. This five-day study will provide valuable data on both tolerability and exposure levels, helping to optimize the formulation selection for the full toxicology study. The carrier formulation is specific to the animal toxicology studies only and will not form part of any human dosing regimen. The PK study is expected to commence imminently, with the full toxicology study expected to restart as early as possible in Q1 2026. Both studies will be completed using the company's existing cash resources and the existing toxicology batch of SDC-1801.
SDC-1802 translational studies for SDC-1802 have been completed, providing a solid data package to support potential further development. The strongest cancer response was seen in hematological cancers with significant unmet medical need, including T-ALL and B-cell lymphoma. The company is reviewing how best to progress SDC-1802 into clinical development and notes that partnering may be the preferred route at this stage. SRA737 is a clinical-stage oral selective inhibitor of Checkpoint Kinase 1, Chk1, that targets cancer cell replication and DNA damage repair mechanisms. In March 2025, the former U.S. license arrangement for SRA737 was terminated, and the asset reverted to the CRT Pioneer Fund. Sareum successfully acquired the license for SRA737 following this termination, renegotiating significantly improved economic terms. The company now receives 63.3% of all future revenues compared with 27.5% under the formal agreement at no cost to the company.
The company continues to explore partnering opportunities for SRA737, building on positive phase 1/2 data that demonstrated good tolerability as monotherapy and promising activity in combination with low-dose gemcitabine in anogenital cancers, an area of significant unmet medical need. Furthermore, Sareum has maintained an investigational new drug application, IND, with the United States Food and Drug Administration, opened by the previous license holder, to conduct a phase I trial in patients with acute myeloid leukemia and myelodysplastic syndromes. The company retains sufficient stock of SRA737 capsules to conduct such a trial. The company remains confident in the potential of SRA737 and is assessing the most effective routes to progress and create value from this asset.
Sareum has initiated a collaboration with Receptor.AI to accelerate the discovery of blood-brain barrier (BBB) penetrant isoform-selective TYK2/JAK1 inhibitors for potential use in neuroinflammatory indications such as multiple sclerosis and Parkinson's disease. This program builds on earlier preclinical work from the company's SKIL platform, which demonstrated blood-brain barrier permeability of selected TYK2/JAK1 molecules. The collaboration extends the relevance of Sareum's TYK2/JAK1 expertise into central nervous system diseases, areas of increasing scientific and commercial interest. A first batch of compounds have been designed and synthesized and are currently undergoing testing in biochemical assays to assess their potency against the JAK kinases and in early-stage absorption, distribution, metabolism, and excretion assays to assess their potential to cross the blood-brain barrier and give sufficient exposure to the target site.
As part of a broader value realization strategy, Sareum has engaged specialist U.S.-based business development consultancy to actively broaden and accelerate ongoing partnering discussions for SDC-1801 and SRA737. The board continues to prioritize non-dilutive funding routes to advance the pipeline and protect shareholder value, with current core activities funded from existing cash resources. Sareum continues to review the optimum level of staffing for the company, including Chief Medical Officer and Chief Executive Officer roles. Sareum has made substantial progress across its pipeline during 2025. The positive phase I data for SDC-1801, together with the competitive profile versus other TYK2/JAK1 inhibitors in development, continues to support SDC-1801's potential as a best-in-class once-daily oral therapy for autoimmune diseases. Despite the frustrating delay to the toxicology study, the company's confidence in the molecule remains strong, and the study is now on track to restart in Q1 2026.
The significantly improved economic terms for SRA737, coupled with active partnering discussions for this asset and SDC-1802, position the company to create value across its portfolio. The new TYK2 neuroscience collaboration adds further long-term potential. The company has engaged specialist business development consultants to support partnering efforts across key programs. With strengthened intellectual property, a clear operational roadmap, active business development initiatives, and sufficient financial resources, the company enters the new period with confidence and a clear set of value-creating milestones ahead. We would like to thank our shareholders and other stakeholders for their continued support. Before we turn to the resolutions, I would like to say a few words about the procedure and remind you that only physical attendees or shareholders are able to vote today.
I will propose each resolution in turn, having briefly summarized its content. I will then read the results of the votes received through proxies. The directors will not answer questions relating to the individual rights of shareholders. Any shareholder who wishes to raise such a question should communicate with me or Mr. Birch by email following the meeting. I shall move on to the formal business of the meeting and will now recite the resolutions. The full text of each of the resolutions is set out in the notice of Annual General Meeting, a copy of which was posted to shareholders or their nominee holders and is on the company's website. Resolutions one to six were proposed as ordinary resolutions, each requiring a simple majority of the votes cast to be in favor in order to be passed.
Resolutions seven and eight were proposed as special resolutions requiring a majority of 75% of the votes cast to be in favor in order to be passed. Each resolution received a total of between 11,838,576, which represents 8.6%, and 11,456,534, which represents 8.3% of the votes of the total votes outstanding. Resolution one. I propose Resolution one in the notice of Annual General Meeting as an ordinary resolution to receive the company's annual report and audited financial statements for the financial year ended 30th of June 2025, together with the director's report and the auditor's report contained in the annual report. Proxy votes have been received as follows: in favor, 11,039,696; against, 283,614; withheld, 472,289. I will now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. Those against, please raise your hands. Thank you. That resolution is carried with a necessary majority.
Resolution two. I propose Resolution two in the notice of Annual General Meeting as an ordinary resolution to receive and adopt the director's remuneration report for the year ended 30th of June 2025. Proxy votes have been received as follows: in favor, 10,021,984; against, 1,544,196; withheld, 229,419. I will now put the resolution to the meeting on a show of hands. Will all those in favor, please raise your hands. Thank you. Those against, please raise your hands. Thank you. It's carried by the necessary majority. Resolution three. Resolution three in the notice of Annual General Meeting is for the re-election of Dr. John Reader, who retires by rotation under Section 93 of the Articles of Association and who, being eligible, offers himself re-election as a director. Proxy votes have been received as follows: in favor, 10,329,982; against, 1,383,000; withheld, 465,234.
I will now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. All those against, please raise your hands. Thank you. I declare the resolution carried by the necessary majority. Resolution four in the notice of Annual General Meeting is to reappoint Moore Kingston Smith LLP as auditor of the company and to hold office from the conclusion of this Annual General Meeting until the conclusion of the next general meeting at which financial statements are laid before the company. Proxy votes have been received as follows: in favor, 11,342,993; against, 325,897; withheld, 126,709. I will now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. All those against, please raise your hands. Thank you. I declare this resolution carried with the necessary majority.
Resolution five in the notice of Annual General Meeting is to authorize the audit committee to determine the remuneration of the auditors of the company for the ensuing year. Proxy votes have been received as follows: in favor, 10,727,596; against, 977,756; withheld, 89,977. I will now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. Those against, please raise your hands. Thank you. I declare this resolution carried by the necessary majority.
Resolution six. I propose Resolution six, the notice of Annual General Meeting as an ordinary resolution to generally and unconditionally authorize the directors pursuant to and in accordance with Section 551 of the Companies Act 2006 to exercise all the powers of the company to allot shares or grant rights to subscribe for or to convert any security into shares of the company: A, up to an aggregate nominal amount of GBP 1,725,815; and B, comprising equity securities as defined in Section 561.1 of the 2006 Act, up to a further aggregate nominal amount of GBP 1,725,815 in connection with an offer by way of a rights issue.
Such authority is to apply in substitution for all previous authorities pursuant to Section 551 of the 2006 Act and to expire at the end of the next Annual General Meeting or, if earlier, at the close of business 15 months after the passing of this resolution, but in each case so that the company may make offers and enter into agreements during the relevant period which would or might require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after the authority ends.
For the purposes of this resolution, rights issue means an offer to ordinary shareholders in proportion as nearly as may be practicable to their existing holdings and to holders of other equity securities if this is required by the rights of those securities or if the directors consider it necessary, as permitted by the rights of those securities, to subscribe for further securities by means of a renounceable letter or other negotiable document which may be traded for a period before payment for the securities is due, but subject in both cases to exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, or legal, regulatory, or practical problems in or under the laws of any territory. Proxy votes have been received as follows: in favor, 10,291,958, against, 1,333,162, withheld, 170,479.
I now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. With all those against, please raise your hands. Thank you. I declare the resolution carried by the necessary majority. Resolution seven.
Given the passing of Resolution six, I propose Resolution seven in the notice of Annual General Meeting as a special resolution that, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date of passing this resolution, the Board of Directors be and they are generally empowered pursuant to Sections 570 and 573 of the 2006 Act to allot equity securities within the meaning of Section 560 of the Act, including the grant of rights to subscribe for or to convert any securities into ordinary shares of GBP 0.125 each in the capital of the company for cash either pursuant to the authority conferred on it by Resolution seven or by way of a sale of treasury shares within the meaning of Section 560(3) of the Act, as if Section 561 of the Act did not apply to any such allotment or sale, provided that this power should be limited to: A, the allotment of equity securities or sale of treasury shares for cash in connection with a rights issue, open offer, or other preemptive offer in favor of the holders of ordinary shares on the register of members on a date fixed by the board where the equity securities respectively attributable to the interests of such holders of ordinary shares are proportionate as nearly as may be practicable to the respective numbers of ordinary shares held by them on that date, subject to such exclusions or other arrangements in connection with the rights issue, open offer, or other preemptive offer as the board deems necessary or expedient to deal with shares held in treasury, fractional entitlements to equity securities, and to deal with any legal or practical problems or issues arising in any overseas territory or under the requirements of any regulatory body or stock exchange or to deal with any other matter whatsoever.
And B, the allotment of equity securities or sale of treasury shares otherwise than pursuant to subparagraph A of this resolution up to an aggregate nominal amount of GBP 1,725,815, and provided that this power shall expire at the conclusion of the Annual General Meeting of the company to be held on or before the 13th of March 2027, say that the company may, before such expiry, make an offer to enter into an agreement which would or might require equity securities to be allotted or treasury shares to be sold after such expiry, and the board may allot equity securities and sell treasury shares in pursuance of such an offer or agreement as if the authority conferred hereby had not expired. Proxy votes have been received as follows: in favor, 10,165,325; against, 1,312,924; withheld, 317,330. I will now put the resolution to the meeting on a show of hands.
All those in favor, please raise your hands. Thank you. All those against, please raise your hands. Thank you. I will now declare that the resolution carried by the appropriate majority.
I'm just thinking, would you go to speak up a little bit more?
Sorry, I'm sorry.
Why can't I be just here now and open the front?
Okay. Oh, let me have a drink first. My apologies. Be pleased to know we're at the end of the road. I propose Resolution eight in the notice of Annual General Meeting as a special resolution that a general meeting other than an Annual General Meeting may be called on not less than 14 clear days' notice. Proxy votes have been received as follows: in favor, 10,941,745; against, 391,565; withheld, 462,289. I will now put the resolution to the meeting on a show of hands. All those in favor, please raise your hands. Thank you. All those against, please raise your hands. Thank you. I declare the resolution carried by the necessary majority. Ladies and gentlemen, that concludes all of today's formal business.
On behalf of the board, I'd like to thank you all for your attendance, and I declare that the formal business of the Annual General Meeting is closed. In closing, may I thank you for all your ongoing support during this year, which has continued to present challenges to the sector generally, despite your company's significant achievement of completing the phase I study for SDC-1801. I will now ask Dr. John Reader to present an update on the SDC-1801 and CNS projects, as well as other projects in the portfolio. Following that, the board will be happy to try and answer questions from attendees, and if time permits, from the IMC platform. Thank you.
Okay. Thank you, Stephen. I'll be happy to give you an overview of the pipeline as it currently stands. There's the usual disclaimer slide. Please familiarize yourselves with this. This will be online after the meeting. I'm not pausing to read through all of this. Okay. So company overview: Sareum is a clinical-stage drug development company. We deal with small molecule drugs. We're developing next-generation kinase inhibitors for autoimmune diseases and cancer. The strategy is to take programs to the late preclinical or early clinical stages and then look to license or partner. We have deep expertise in kinase inhibition, including the JAK signaling family, which is an area of growing commercial focus with good scientific validation. Our lead program is a dual TYK2/JAK1 inhibitor for autoimmune diseases and has successfully completed a phase I clinical trial.
And as mentioned, we recently regained control of the oncology asset SRA737 with improved economic interest. And we're based in Cambridge in the U.K. Here's an overview of our pipeline then in a picture. So you'll see that SDC-1801, the dual TYK2/JAK1 inhibitor, has completed a phase I in healthy volunteers. Behind that, we have SDC-1802 and the recently announced neuroscience project. And then in the field of Chk1, former license holder Sierra Oncology completed two phase 1/2 trials, one as a monotherapy and one in combination with low-dose gemcitabine, a chemotherapeutic. And then there is a lot of preclinical work that has been done around this molecule and other Chk1 inhibitors to find other potential combinations which would have utility in the clinic.
To give you a summary of the SDC-1801 program then, we believe it's well positioned for further development as potentially a best-in-class TYK2/JAK1 inhibitor in multiple high-value indications. There's a validated mechanism of action and a strong rationale. So dual inhibition of TYK2 and JAK1 can deliver superior efficacy across a large number of autoimmune diseases. We think it's better than single inhibition of each target, but avoids the liabilities tied to JAK2 and JAK3 inhibition. The high selectivity for TYK2 and JAK1 supports a stronger safety profile and positions the molecule to be potentially the best in class. I'll show you some data, but we've seen a very favorable pharmacokinetic profile for JAK inhibition driven by the extended human half-life of the drug. 1801 showed no effect on neutrophils or reticulocytes at doses equivalent to 100 mg of brepocitinib.
Brepocitinib is the leading asset in the clinic, a molecule developed by Pfizer. I'll show you some data comparing 1801 to brepocitinib, we believe, very favorably. Brepocitinib shows some side effects which we avoid. Principally, this OCT2-mediated kidney liability and the effect on neutrophils and reticulocytes as a component of blood. Our molecule has a greater human half-life, so about 17-20 hours versus brepocitinib's 6-8 hours. We believe that dual TYK2 JAK1 inhibition has the potential to target multiple autoimmune disorders. There's a broad therapeutic reach within a single molecule and strong evidence to support efficacy in diseases such as psoriasis, lupus, inflammatory bowel disease, rheumatoid arthritis, and other autoimmune diseases. Our phase I data was very favorable. We had a great safety profile, excellent pharmacokinetic characteristics, and we believe they provide meaningful advantages over competing agents.
Currently, we're aiming to get SDC-1801 ready for phase II by the end of Q2 2026. Why do we believe dual inhibition is better than single inhibition? I'm not going to go through this slide in great detail, but what it's showing is for a number of diseases, autoimmune diseases, the key pathogenic cytokines. These are signaling molecules that drive the development and the duration of the disease. What we're showing on this slide is that inhibiting TYK2 and JAK1 really gives you much broader coverage than the single agents. The main difference, I would say, between our molecule and a selective TYK2 inhibitor is the effect on interferon gamma. You'll see interferon gamma is a key pathogenic cytokine for all of these molecules. The selective TYK2 agents do not touch that cytokine. Dual inhibition of TYK2 and JAK1 does.
I would say that's the single most important thing. But I'd be happy afterwards to go through this slide in more detail with anyone who's interested. What I'm showing you here is some data from the MAD phase of our phase I clinical trial. So this is multiple ascending dose, 10 days' dosing of SDC-1801 in healthy volunteers. And I'm showing you the levels of drug in the blood of the volunteers. And again, so we're looking at four cohorts here. I'll just draw your attention to the top two cohorts, really. Cohort C and D, and we're comparing the levels in the blood to the IC50 or the EC50. This is 50% inhibition of these target cytokines. And you can see that cohort D, we exceed the human whole blood interferon alpha and IL-12 IC50s throughout the entire dosing period.
Cohort C, we're very nearly there, exceeding interferon alpha throughout the period and IL-12 for a significant period of time. Our plasma exposure is equivalent to brepocitinib at 100 mg. Okay? Brepocitinib cannot be used in the clinic at 100 mg. There's too many toxic side effects. We saw no hematology or serum creatinine changes with our molecule during 10 days' dosing. Brepo at 100 mg causes increased serum creatinine, sorry, and reductions in reticulocytes and neutrophils after 10 days' dosing in their MAD study. This is showing cohort D in more detail now. It may not be obvious, but what we're seeing here is we're doing twice-daily dosing for cohort D. Okay? And this was to do with maximizing the levels of compound that we got. So we couldn't achieve those high levels with a single dose, even though the half-life is set up ideally for a single dose.
This is really why we're working to improve the formulation for the molecule so that we can give a higher dose of SDC-1801 with a smaller number of capsules. But what we're seeing is in the table below, cohort D, we're greater than the IC50s. We're greater than the IC80s. So 80% knockdown of these cytokines for the entire period of time that we're dosing. In contrast, brepocitinib at 30 mg. So that's the dose that brepocitinib is typically used in the clinic. They have gone as high as 45 mg. They can't use 100 mg. Okay? But you'll see at 30 mg, they're getting five and eight hours excess of the EC80, 14 and 12 hours in excess of the EC50. So we believe 1801 has potential for best-in-class efficacy.
What we're looking at here is the number of agents on the market or close to the market for psoriasis. Talking about this PASI 90, so that's a psoriasis area and severity index. It's the score that dermatologists use to say how severe psoriasis symptoms are to the patient. PASI 90 has become the gold standard for psoriasis patients. That's really been driven by advances in biologics and antibodies such as SKYRIZI. It's an inhibitor of IL-23. Then recently announced oral IL-23 inhibitors such as icotrokinra achieve significant PASI 90s after 4 to 16 to 24 weeks. Now, brepocitinib was taken into a short four-week study at 100 mg, and they achieved PASI 90 after four weeks. That is much better than any of these other agents. Now, just a reminder, brepocitinib cannot be used at 100 mg in the clinic. Side effects are too great.
But we believe we can, with our cohort D, we can achieve a similar exposure to brepocitinib without the side effects. So we would expect that we can achieve similar PASI scores to brepocitinib. What we're doing at the moment then is preparing for phase II readiness. We've re-synthesized the drug substance. That's the molecule, the powder that goes into the capsules. That's complete two batches for TOX and for a future clinical study. We've improved the process chemistry around that. We're working on improving formulation. We're expecting to complete that next quarter with the objective of improving absorption, particularly for higher dosage capsules. And then we'll prepare the capsule sizes consistent with the predicted phase II doses. And then 16-week toxicology, which will restart early in the new year, and we're expecting to complete by the end of Q2.
Let's just talk a little bit about what happened in the toxicology studies as far as I'm able. So 1801 has been very well tolerated in our previous preclinical and short-term toxicology studies. The data from those and the human data from a clinical trial supports a longer duration, high-exposure studies to really define the safety margin. Because we're trying to get a higher exposure of the drug in the preclinical species than we do in human, we use specialist formulations, usually unsuitable for human use, frequently used in the industry to enable the sustained high exposure that you want to get in the toxicology study. W e used Formulation A in all of our previous TOX studies, but including the four-week study, and there were no adverse effects reported.
Unfortunately, in the recent 16-week study, we used the same formulation, and at around the four-week time period, we had to discontinue the study on animal welfare grounds. The effects were observed with greater frequency in the control groups receiving formulation only. W e are very, very confident that these effects are not due to SDC-1801. They're vehicle-related. So, as Stephen mentioned in the report that came out this morning, we have a five-day PK study, which starts today, actually, which will look at four additional formulations. Three of them have a track record of use in long-duration studies. The fourth is a capsule formulation, which we have developed ourselves. And the objective is to evaluate the tolerability of these formulations, to look at the exposure, and obviously to select the best one to take forward into the 16-week studies.
That study has been commissioned as an alternative CRO and will commence as soon as possible in Q1 after we have the data from the PK study. Just briefly on 1802, the translational studies are finished. The chemistry is closely related to 1801, so we'll be able to use our learnings from the development of 1801 to transfer onto 1802. We have a strong patent position covering several disease targets, both in oncology and autoimmune disease. Again, 1802 is a dual TYK2/ JAK1 inhibitor. It's well validated in hematological cancers such as T-ALL, B-cell lymphomas. And we're reviewing our options for further development of 1802 to get it into the clinic. Partnering is likely to be preferred. Let's talk about the new CNS project.
There's been a lot of evidence recently in the literature concerning TYK2 inhibition in neuroinflammatory diseases and linking the two closely together in diseases such as multiple sclerosis, Parkinson's, and Alzheimer's disease, all areas of high medical need. TYK2 has been demonstrated to be a key neuroimmune modulator in those settings. We have a collection of TYK2/ JAK1 inhibitors, and we thought we ought to look at the potential for brain penetrance amongst those molecules. We selected six compounds and got them screened, and we were able to demonstrate that three of them showed meaningful blood-brain barrier penetration, and one in particular had high levels of free drug in the brain. Importantly, it's not on this slide, but we were able to use an in vitro assay that would give us a really high level of confidence. It correlated very nicely with blood-brain barrier penetration. So we can use that going forward.
The big market opportunities in neuroinflammation, millions of people affected with limited treatment options. We have partnered with Receptor.AI, announced this collaboration in August 2025, an initial four-month partnership to optimize brain penetrant TYK2/ JAK1 inhibitors. We own 100% of the IP. Receptor.AI do their virtual screening and PK predictive models. We have done the compound synthesis and testing, and we will take any molecules that show merit into disease models downstream. Progress to date, Receptor.AI developed their model of blood-brain barrier permeation. They have done docking. This is modeling how our molecules sit in the active site of TYK2 and the other JAKs to look at selectivity. Our first round of compound design and synthesis is complete. We have got our in vitro ADME profiling back, and actually, biochemical screening data came back last night.
I've had a good look through that. Very briefly, we've got molecules that pass our in vitro assessment for blood-brain barrier penetration, and we've got some really very potent molecules inhibiting TYK2 from that. Now, we almost certainly don't have a clinical candidate, right? There's more work to do, but I think it represents a very good starting point for that. The objective of that collaboration was to really get us started down this route to some developed candidate for taking into CNS disease models. Then just finally, I'll talk about SRA737. It's a small molecule Chk1 kinase inhibitor. Completed phase 1 and 2 trials. Just the history was originally developed by CRUK. It's completed two phase I and II trials as monotherapy and in combination with gemcitabine, sponsored by Sierra Oncology.
When Sierra was acquired by GSK, they handed back the assets, other than momelotinib. SRA737 was relicensed for about a year to a U.S. biotech. They returned it in December 2024, and we took the program over in March 2025 with improved economics. And so we're currently evaluating the potential licensing and development opportunities for 737. Just want to show you this data. This is quite old data from the clinical trial, but I think it really shows why 737 is potentially the best-in-class Chk1 inhibitor. And what we're looking at, if you look at the monotherapy data, you'll see low-grade, mainly side effects on the gastrointestinal tract. So nausea, vomiting, diarrhea, fatigue. Very little effect on hematology. Some anemia was seen, but very low anemia of high grade. No neutropenia. That's effect on neutrophils. No thrombocytopenia. That's effect on platelets.
If you look at the phase I or clinical data for other Chk1 inhibitors, you very often see hematological toxicities. And we believe that is because they are not selective enough, particularly against Chk2. So inhibiting Chk2, which, as the name suggests, is closely related structurally, that brings in hematological toxicities, which we don't see with SRA737. And that means that you can combine it with chemotherapeutics, and you'll see in this one, even with low-dose gemcitabine, you do start to bring in hematological toxicities, as you'd expect from a chemotherapy. But because of the, I suppose, benign nature of SRA737, you're able to combine with these chemotherapies and still have very low incidence of high-grade hematological toxicities. W e think that is a real distinguishing feature of 737.
Just, this is again some old data from the clinical trial that Sierra sponsored, showing the meaningful tumor response among some patients when combined with low-dose gemcitabine, and this is really significant, obviously, to the patients who received this, but in taking this program forward, that we've shown meaningful tumor responses among patients. I'm not going to go into this slide in any great detail, but the company who had the asset for a year did quite a lot of work, and they've really validated the potential of SRA737 in acute myeloid leukemia and myelodysplastic syndromes, AML and MDS, series of blood cancers, and they were able to open an IND, so it would right the ability to start a clinical trial in the U.S. in AML and MDS patients with SRA737. We've taken that on board now, and I just draw your attention to the third bullet point.
I'm not going to get into this in any great detail, but these mutations to SRSF2 and U2AF1, these are splicing factors. They're essentially actionable predictive biomarkers. So you can screen patients for these mutations in advance, give them SRA737 with a high expectation that they could respond to 737. And these are really the first predictive biomarkers for Chk1 inhibition that have emerged in the literature recently. W e're getting excited about AML. So with this open IND with the U.S. FDA to conduct a phase I clinical study in combination with a standard of care, the previous license holder demonstrated profound synergy in preclinical studies between the standard of care and SRA737, concentrations which are readily achievable in clinic. A potential subgroup of patients who can be selected in advance, with a high expectation of sensitivity to the agents.
We've got enough capsules to conduct this planned study, and there's also a lot of the active pharmaceutical ingredient, the powder. We've got lots of that in store and advanced intermediates to generate more of that molecule. W e think it's a really great package of IP data assets, physical assets, that a licensed partner could get into the clinic extremely rapidly. So this is the final slide. Just to summarize then, SRA737 has demonstrated promising clinical activity. It's very well tolerated as a single agent, which means it can be combined with chemotherapy. Strong clinical validation for this class of molecules with DNA damage response class. The molecule has excellent drug-like properties, low drug-drug interaction potential, a strong preclinical data set, and this open IND to conduct a study in AML and MDS patients.
There's also a lot of other preclinical data to support potential use and clinical data, I should say, in anogenital cancer combined with low-dose gemcitabine or in other tumors when combined with immuno-oncology agents such as anti-PD-L1 or other inhibitors of DDR pathways such as PARP inhibitors. Okay, that's the final slide. We can move on to the next one.
Thank you, John.
Thank you.
So let's throw it open to the floor. Would anyone like to kick off and ask a question? Yes, sir.
Just want to, the calculations show that at the start of each year, your fixed costs are just over GBP 900,000. I've deduced that from the personal cost last year, GBP 645,000. I've taken off GBP 60,000 for the bonuses. I add GBP 350,000 for the cost of blood in the English theatre costs, practice costs, etc. [audio distortion] Off of it, I mean, last year, you've got an amazing amount of interest, which is probably not repeatable. When I come up with a figure of GBP 900,000 a year, fixed costs, even before you turn on the light and let me know if you do any clinical studies. Is that a figure that chimes with your estimate?
It's probably not far off. I guess if you want an accurate answer, we can double-check it and post it as an answer to an IMC question. But I'm just trying to think.
Anyway, in the A75, this is even before we've got our new CMO or CEO or even the cost of these chaps recruited in the state head. If you wanted to get some, and is that another interested set? Eligible for EIS funding?
The company, yes, the company is eligible.
Yes. So yeah.
So that cost is eligible for EIS funding.
I mean, the company in general is. I don't know whether costs get split out. I'm pretty sure they don't. No, I mean, it's the company in general, rather than what we're trying to do with it.
I mean, that just kind of prepped my comments that I'm a very active member of the R&D department. I do fret that he must be terribly overstretched. I mean, 10 or 15 years ago, the whole intensity of what Sareum was doing seemed to be much less, and there were two people involved. I mean, am I right to fret that John is terribly overstretched, Mr. Chairman?
Not sure.
Terribly stressed.
[audio distortion] I mean, I could come on point here that in the risks that you outlined in the annual report, there was no mention of what I see as the key man risk of John. What happens if he has a car accident with a London omnibus? I mean, we never get to see him. That's why I was encouraged by your comment on CMO, which of course accords with my previous comment, the GBP 900,000 give or take of fixed costs per year. But I mean, am I right to fret?
We have insurance. So if I were to have an accident with a bus, it would be financial compensation. I think we work with consultants, so particularly with toxicology and for the chemistry. There are consultants who are very involved in the project, have all of the records that I have, would be able to pick up if I were to have this accident with the bus. And I think the other thing is just to say that everything is now, the data is stored, the data is available, it could be picked up by somebody. I think we have good contingency plans should the worst happen.
Okay. I mean, I have to say, from my perspective, a CEO at this stage seems an unnecessary luxury. A CMO, I'm not quite sure what a CMO does, seems to be something very worthwhile to do.
Yes. Well, and that is exactly where the priorities are.
Please. Sorry, sir. If I may just ask you to repeat questions because we can't hear the attendees in the room. Just moving forward. Thank you, sir.
Okay. Thank you.
Sorry to interrupt.
We'll carry on, finish this one. I mean, yes, CMO is the higher priority of the two roles, absolutely. And broadly speaking, in terms of the skill set that will be brought, I mean, John, of course, is absolutely fantastic on discovery and has got us to where we currently are. Development as going forwards and indeed planning for development is an entirely different set of skills. And while John has done a fantastic job thus far, probably if you're looking to plan an efficacy study, then you want somebody who's actually been there and done it directly.
Stephen, could I just?
Please.
[audio distortion] You're quite right about the CMO. CMOs become very expensive. I mean, a full-time CMO would almost certainly come out of a very salaried CEO. However, there are a lot of CMO consultants around the world who come out of industry like pharma. One can utilize their services at a level that the company can afford, and the very best ones can make a huge difference in value in the sense of being able to, if you do a phase II clinical trial, I could figure things. I'm not going to be qualified. I could figure things. The disease, the type of disease, the patient population, the source of measurements that one does, and the intrinsic knowledge of where the patients are because of phase II trials in multiple centers, networks with the clinical PIs, absolutely essential. One can use consultancy. One can regulate the cost appropriately.
So, I at least do not think, unless the world changes in terms of investment, we will be getting a full-time FTE, even to say three days a week CMO, because they are super expensive. But there's a lot of top-notch consultants there that we need. And so I absolutely take your point of being with you. We need to add, we need to decompress, John, we need to add expertise. And we need to be able to factor that in the way that the company can fund.
Thank you. Yes, sir.
[audio distortion] First of all, I was glad to see there were really few votes against you, John. I don't know who they were. And just the company's policy going forward is obviously non-dilutive funding. Given what we've heard so far today, there's lots of things that appear to be at the starting gates to take forward. Obviously, there will come a cost over and above what's been spent so far. What is the actual game plan here? Because obviously, the toxicity, once we've repeated that, I'm assuming that the cash funds will be running out. That's in six months' time, according to the slides that you've shown us. Are there any proposals, agenda that you've brought to the floor on your way forward as far as funds are concerned?
Yeah. This is a question regarding future funding for the company. The answer, obviously, these are forward-looking statements, of course. The answer is this is exactly why we have such a high priority for getting 737 and ideally 1802 partners, because those are each of them potentially sources of non-dilutive funding coming into the company. Obviously, all things have to come together.
But in terms of our priorities, we're very, very firmly fixed on getting those over the line.
Yes, sir.
Can I make just a brief observation first and then a question?[audio distortion]
Please.
[audio distortion] I'm a very disillusioned shareholder. To me, we've had years of promises and pipelines with almost zero meaningful income and no tangible value created, despite the often repeated mantra to maximize shareholder value. So rather than we've had destruction rather than creation of shareholder value, we've had a near-death experience with [audio distortion] RiverFort Financing. I don't know who was responsible for that. Still continue to have poor communications, which admits that we could be marginalized in the middle of [audio distortion] DOT.
Despite the Board of Directors enjoying well-remunerated salaries over many years in a period of a steadily declining share price, when I looked at paying the small share price, I think it was GBP 0.13, the absence of meaningful share purchases by the board to both stabilize, try to stabilize, and promote the share price, to me, demonstrates a lack of confidence, lack of their confidence in the incumbent. And it just, to me, it questions why investors should continue to fund a business which has seemingly failed to turn scientific promise, no doubt about that, into measurable financial progress. Certainly, with regard to the share purchases, I'm quite astounded. I do appreciate that obviously there are periods when we come to regulatory restrictions. But given that the share price has been so low, so long, I'm mystified by it.
Also, the majority of your holdings are in the form of informal share options, which have been granted over many years. And as I understand it, those share options are all out of the money. In fact, when our share options were issued at a price of GBP 0.30, I think I'm right in saying in December of last year, well, the share price sits under half that. So does that not encourage you to want to invest and show confidence, at least, in the company?
Well, you've raised a whole host of issues, many of which are unfortunately a lot to do with the sector, not necessarily just the company. But I would gently point out to you that I have repeatedly bought shares in this company. So frankly, I'm not impressed by the criticism. Moving on from that, there isn't, as you rightly say, there isn't always an opportunity to buy shares. There is a very fine line, and we have advisors in the room who will be very quick to tell me that there is a very fine line between investing in the company and seeking to manipulate the share price, which is not something, of course, which we can do or will do. W e believe we are working extremely hard for all shareholders, not least ourselves, because as you rightly say, we also, being shareholders, are not wildly excited about where the share price is at the moment. W e're moving things forward, and we are very committed, or might argue overly committed in terms of share portfolio, to this company and to holding shares in it.
Speaking personally, all I could say is that the quality of my old age will be materially affected by the exits that Sareum achieves. We are entirely incentivized to make that as positive as possible.
Most of your shareholders that are in the pools, in the greater part, selling a portion of the shares is in the pool share options.
Well, some of them are, but I have gone into the market repeatedly and hold shares.
I have a similar amount of shares to you, sir. I don't want to personalize this with you. I have a similar amount of shares to you for over seven or eight years. I've made a mistake and could say I'm averaging down. In fact, my last purchase was a few days before the ill-fated [Moritz] in October announcing the termination of the toxicity study. [audio distortion] But I'm certainly 60% down over that period of time, having invested a considerable amount of money. And I just don't see a light to push the share price in the other direction. [audio distortion]
Well, as I say, you must be very, very careful in the way that you describe that, because we are not able, I mean, we'd be fitted for a very nice orange suit if we start manipulating the share price through share purchase or otherwise. And before anybody on the board can buy a single share, it has to be cleared through all the advisors. So this is not a sort of, this is not a trivial matter. And when I have been able to, I have bought shares. We can't just go sort of dancing into the market. We're not employed as fund managers.
The value in this company will come from getting the fundamentals of the drugs right and move them forward so that that value is recognized in the external market and hence, I hope, in the share price.
[audio distortion] Can I also just ask, are there any bonuses being prepared for this year?
That happens after the year has ended, which it hasn't ended yet.
Could I suggest that?
Please.
You mentioned the remuneration of directors. So this really, Clive and I, the two members of the Remuneration Committee, we look every year at the benchmarking data for AIM companies of an appropriate size or similar size. The two non-executive directors' remuneration is well within the first quartile. So the two non-execs, I, myself, and Clive would certainly not be higher than this with well-paid non-execs in AIM companies of this size.
The two execs are paid round about the median, but actually a little on the left of the median, so again they're not in terms of base salary. They're not in the upper quartiles, so we deliberately look, we look from a shareholder perspective, I normally, and we try to get remuneration down. Now, to the previous question, we could say, "Fine, okay, we'll take them like that." You lose John, maybe, and you've just said how important John is to the company, so we try to strike a balance between retention, which is important, and keeping the salary costs down. That's base salary. In terms of bonuses, we are, to be honest with you, Clive and I get continual pushback, I guess, in terms of how stingy we are in recommending bonuses to the board, so we do not pay every year large bonuses.
If you look at the bonus levels again, by the benchmarking data for AIM companies, the bonuses that we pay are actually not high in comparison. We chose to pay a bonus for 2024 because, in fact, the effort required to run a clinical trial, a phase I trial, successfully, on time, within budget, in Australia, which was the major value driver at the time, in our view, for the company. You might argue it hasn't driven it that much, but sure as hell, if we'd have failed in the trial, it would have been much worse. We felt that that merited a bonus. The bonus given for 2024 was, if memory serves, 25% of the base salary. That is a low bonus for this industry. Whether we pay a bonus for 2025, we will look at the same criteria.
It will have to be something truly exceptional for the executive to get a bonus because that's how we look at it. So you raise an important point. We do need to keep salary costs down. The Remuneration Committee tries hard as possible. And I do not think that if you looked at other companies, you would say that we're paying ourselves where we ought to. I don't know whether that helps or whether you're convinced by that.
I don't have an issue with the salaries.
Well, you mentioned the remuneration of the directors. [audio distortion]
I don't think that was the question. I think the question was more the lack of buying shares on the open market. So after the RiverFort fiasco, you came to the room and asked people to invest, which we did, we put our money into the business. I think what we're asking here is for you guys to perhaps do the same if you're currently able to. [audio distortion]
Well, just to point out, so did we. So did we at that stage.
[audio distortion] You said the company affected share prices. You seem to do that. You could argue that since October 10, your lack of action has manipulated share price, unfortunately, in the wrong direction.
Thank you. Matt, do you go first?
Yeah, just to give some context. Are you aware of Alumis, which is on the Nasdaq, which has a dual TYK2/JAK1?
Alumis, yeah.
Yeah. I mean, they're certainly more advanced and they've got a full program. But I think just to give some context, their directors have bought in substantially over the last few months, and that's led to an increase in share price. I think the point remains that if you have commitment and you have belief in the company, the founders, the co-founders, that's exactly what they did. It's exactly what I would do in your position. So, it doesn't show a lot of confidence. I think that's the point that's being made here. If you're not willing to put that money in, you're asking everyone else to do the same thing.
Do you?
So, there is pressure here.
Yeah. So, point taken, Matt, but do be careful with correlation versus causation. You're describing a company that you yourself said is further along than we are. So, that would suggest that there is an intrinsic reason for there being greater value in the company. So, rather than to yes, Paul. If we can move on.
Yes.
For clarity, John, on the slides with the where we are with SDC-1801, I know that, obviously, you said it ceased after four weeks. So obviously, quite early impact. You're saying that we're going to start it as of today, the five-day study on the human side of things. You're looking at Q1 finalising the formulation and a view of completing the actual toxicity by the end of Q2. They're all very fine timelines, given the festive period coming up. And if we work on the worst-case scenario, we don't get formulation right to Q1, we get up to the end of H2. Do you see that as the worst-case scenario? So I think one of the things for shareholders was the lack of communication on where we were. We were imminently starting, actually starting toxicity.
Just from my own peace of mind, I'd like to think that the human one will be completed before the end of this year and we can move forward. Do you expect the formulation to take three months before you actually start with the toxicity study?
Sorry, you said the human one?
The five-day, I'm expecting the data from that will be fairly imminent. So you then get into the reformulation immediately in the new year.
Right. T he PK study that starts today is not in humans? I'm sorry. So John, do you want to repeat the question?
So for the benefit of people online, it was a question about the timelines of the ongoing PK and tox studies. Is that right?
Yes.
So the PK study that started today is in the preclinical species that will be used in the toxicology study. I would say it's a very realistic timeline. Okay. And every year we have comments about the communication and lack of communication. I personally struggle a great deal with the amount of detail that we do give out. Things like time. So a five-day PK study does not take five days. It takes considerably longer. A 16-week toxicology study does not take 16 weeks. It takes considerably longer. And I personally find the level of detail that we give in communications sometimes problematic. Okay? However, we hear you. Communication is an issue--
I would argue to put across is because sort of our only communications on the lovely billboard that we have at LSE, which gets quite childish sometimes. And it would be good that the board actually feed that information out generally so it's understood where we are. Because the way I'm seeing it at the moment is that there's lots of things that are ambiguous, and it would be good that as you complete those phases, provided you can under the market conditions, put that out to the market so we know where we are rather than just sitting there waiting, and I think that alone would encourage the SP without you guys, I think, to invest or whatever. I think the lack of communication does have an effect on the SP.
Yeah. I can understand.
That's all I'm asking--
And the danger of that is exactly what happens. We make announcements about we've started a toxicology study. It went wrong. We have to announce that.
Yeah, of course you do, and those things happen--
W hen you make the announcement of starting the toxicology study, the share price goes up 3%. And when you make the announcement that you've had to stop the study, the share price goes down 20%.
[audio distortion] Yeah. I just feel that you could be a little bit more clearer and more informative as these things progress.
Okay. Right.
Well, as John said, as we've said various times before, we hear. We are, in fact, we have them in the room, of course, but we are surrounded by advisors as to what should or shouldn't be said as we go. And the only thing worse with paying money to have advisors around you is not to listen to them when they advise. W e do pay attention to their advice as well.
Time has run away with us, I'm afraid. We haven't had a chance to get on to pre-submitted questions. I apologize to people online. We will, as we said previously, produce answers and post them on the website in the next few days. I would just like to wrap by thanking you all for making the effort to come. It's always good to have a full room in person. I hope that you feel happier post the announcements and the AGM than you were yesterday. And let's all have a very good Christmas and look forward to 2026. Thank you all.
Thank you to the Board of Sareum. Thank you very much.