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e-Therapeutics plc: DEEP DIVE

e-therapeutics sees biopharma sector get in tune with its way of thinking

E-therapeutics believes it is now focused on the right activities
Artificial intelligence
OVERVIEW: ETX The Big Picture
Losses are narrowing

The turnaround is continuing at drug discovery firm e-therapeutics PLC (LON:ETX).

Following a systematic review of the group’s operations by the chief executive (CEO) Ray Barlow, after he took the helm in April 2017, the group is now focused on the right activities.

“With prudent cost control, we are creating as many opportunities for value creation as our current resources allow,” Barlow said.

“Our business development efforts are beginning to bear fruit and we are now viewed as a serious and credible innovator with a unique set of technologies and assets,” he added.

A sign of progress is the group’s reduced losses​

The AIM-listed firm reported a reduced full-year operating loss of £6.8mln for the year ended 31 January 2018, down from a £16.3mln loss a year earlier.

Subsequently, the first half of the current fiscal year saw the pre-tax loss narrow to £2.7mln from a loss of £3.6mln in the corresponding period a year earlier.

In its outlook, the company said it was likely there would be a further reduction in its operating losses in the second half of the year, reflecting an ongoing cost reduction plan and anticipated lower spend on two core drug discovery projects.

The group ended July 2017 with cash and cash equivalents of £5.6mln, compared to £7.9mln previously, and reckons it is financed into 2020.

In a research note on the company, Capital Network analyst Riccardo Lowi said e-therapeutics results “reflect good progress on the main research programmes.”

The analyst said he values e-therapeutics leading programmes at about £60mln and attributes a value of £50mln to the firm’s network-drive drug discovery (NDD) platform.

WATCH: Riccardo Lowi on e-therapeutics

Lowi added: “Taking into consideration the cash balance at the end of January 2018 and the £1.4mn tax credit due in 1H19 (Feb-Jul of calendar year 2018), we get to a valuation of about £120mln.

“Applying a 30% discount to account for potential future dilution, we reach our intrinsic value of £83mn, about 4x current market cap.”

At its current share price of 7.5p, e-therapeutics has a market capitalisation of around £20mln.

Collaboration is the name of the game​

Back in January, e-therapeutics signed two collaboration deals that it said will enhance and extend its artificial intelligence (AI) technology capabilities.

Both Intellegens and Biorelate have AI tools which, after pilot studies, have been shown to complement e-therapeutics’ existing computational NDD technology.

The NDD is a computer platform that uses data mining and artificial intelligence to identify compounds that could potentially disrupt the progression of a disease, helping to develop better treatments.

Intellegens is a spin-out from the University of Cambridge that has developed a unique AI method for training neural networks from incomplete data.

As for Manchester-based Biorelate, it uses AI to create databases by analysing published literature around a certain topic – digging out the most important and relevant pieces of information from masses of research journals and papers.

Jonny Wray, e-therapeutics’ head of discovery informatics commented at the time: “We already utilize machine learning heavily in our discovery platform to augment empirical biological and chemical data

“These partnerships will enhance and extend our internal capabilities via collaborations with companies at the cutting edge of AI research and application.”

“Open the aperture”

Networks are a rapidly growing area of drug research. Instead of focusing just on one gene mutation or single target, the network approach looks at the broader interactions within disease mechanisms.

The e-therapeutics’ platform is founded on the ability to “open the aperture” and look at disease biology as an interconnected network.

The in-silico (computer simulation) part of the engine uses a very sophisticated computational approach enhanced with artificial intelligence tools and other state-of-the-art analytical approaches to build and analyse network models of disease’.

The final part maps those compounds that will have a positive impact on the disease from a database of tens of millions of active compounds.

Since taking charge, e-therapeutics boss Barlow – who joined the group from US giant Amgen – has narrowed the group’s focus on internal discovery projects from six to the two most commercially attractive.

That will see the company take its Hedgehog tumour treatment and an anti-influenza programme to the industry as potential out-license opportunities and to help demonstrate the effectiveness of its NDD approach.

Network pioneer

The CEO’s strategic review was carried out with help of a number of big pharma and biotech peers and a systematic analysis of data, market opportunity and unmet commercial and clinical need which led to those two products being selected.

Barlow believes e-therapeutics was ahead of its time in pioneering the network route but now the industry is coming around to the group’s way of thinking.

In the first seven months of 2018, the company was shortlisted as a preferred partner by a number of biopharma companies as part of their AI/machine learning technology selection exercises.

"Our network-driven view of biology and disease is gaining more and more attention in literature and the industry.

“We are looking forward to riding the wave at the amazingly exciting intersection of biology and technology.”

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e-Therapeutics plc Timeline

CN Video
March 29 2018

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