The stock price has fallen by 90% in a year, and the major shareholder was forced to liquidate last month, at this juncture, the stock price suddenly rose by more than 20%, which may not be a good thing for Sirnaomics-B (02257).
On April 17, Sirnaomics' share price opened higher in early trading, with the highest increase of 37.87%. On the news side, Sirnaomics announced on the same day that the company had received a written response from the U.S. FDA regarding the Class C meeting required by its core product STP705. The Company has initiated the required preclinical studies in accordance with FDA guidance.
According to Zhitong Finance APP, the purpose of the above-mentioned Class C meeting is to obtain FDA's recommendations and opinions on the proposed non-clinical and clinical development plans, and to prepare for the Phase II/III and Phase III clinical studies of Sirnaomics for the follow-up treatment of isSCC. As Sirnaomics' core product, STP705, is still in Phase II clinical trials, the commercialization value of Sirnaomics and the commercialization feasibility of the company's own delivery technology have not been verified.
This R&D process is a further step and can be regarded as a major R&D milestone. However, this may be a good thing for other innovative pharmaceutical companies, but for Sirnaomics, it does not seem to be the case. For this 18A company, the depleted cash flow is already a sword of Damocles hanging over its head.
Major shareholders were forced to liquidate, and cash may not be enough to support them for half a year
In March this year, Sirnaomics, as the "first stock of small nucleic acid drugs" in Hong Kong stocks, attracted market attention due to its continuous announcements during the quiet period of financial reports.
Zhitong Financial APP learned that on March 7, Sirnaomics announced that 1.56 million shares held by Lu Yang, executive director and chairman of the board of directors of Sirnaomics Pharma, were forcibly sold due to the unmet requirements for margin payment, accounting for about 1.78% of the company's total issued shares.
On March 18, Sirnaomics once again announced that its 99,500 shares held by Dai Xiaochang had been forcibly sold on March 15 because the executive director Dai Xiaochang had once again failed to meet the deposit payment request. In addition, Dai Xiaochang holds 7,828,000 shares, of which 6,640,500 shares are being deposited in securities accounts with margin financing with financial institutions as collateral for his personal financing arrangements. This part of the shares, which represents 7.58% of Sirnaomics' shares, will also be subject to compulsory sale if a repayment plan is not provided to the satisfaction of the financial institution.
Through the query of Zhitong Financial APP, it was learned that after March 15, Dai Xiaochang was forced to liquidate his position for 5 consecutive days from March 18 to March 22. As of March 22, Dai Xiaochang's shares fell to 2,356,600 shares, accounting for 2.49%. In other words, after March 15, Dai Xiaochang's shares were reduced by a total of 5.4718 million shares. Combined with the above information, 80% of the 6.64 million shares pledged may have been forced to sell.
In this context, on April 17, Sirnaomics' share price suddenly rose by nearly 40%, and the turnover rate reached 12.43% on the same day.
On the other hand, from the 2023 results disclosed by Sirnaomics, it can be seen that the sales revenue from 2019 to 2023 is zero because the company still does not have a commercial product.
While the pipeline continues to evolve, the company is consciously cutting back on expenses. According to the data, the company's R&D expenses decreased from $67.641 million in 2022 to $54.382 million in the same period in 2023, followed by administrative expenses.
It is worth mentioning that, according to the R&D progress disclosed by the company, the progress of the core product STP705 in the two indications of isSCC and BCC is consistent with the progress disclosed in the 2022 annual report, and it is still only phase II clinical trial.
The reason for the company's voluntary fee reduction may come from the company's cash flow pressure. In terms of cash flow, the company's cash and cash equivalents decreased significantly from $105 million in 2022 to $23.884 million in 2023. In other words, based on the company's net loss of US$84.99 million in 2023, the cash on the books is currently only enough for Sirnaomics to burn until the first quarter of 2024.
However, the lack of R&D funding does not seem to affect Sirnaomics' corporate welfare, and the financial report shows that the company's directors' remuneration and employee costs have increased from US$21.6 million in 2022 to US$23.3 million in 2023. Among them, the remuneration of directors increased from US$1.91 million to US$3.37 million, a year-on-year increase of 76.44%.
Can selling pipelines survive?
Since Sirnaomics has no products to commercialize at present, and its main sources of liquidity are equity and debt financing, the successive liquidation of shareholders may affect the company's subsequent financing.
Combined with the 2023 financial reports of the above-mentioned companies, without follow-up financing, Sirnaomics' new drug research and development may not be able to continue until June this year, so if it wants to survive, selling pipelines or technologies may be an option.
According to Zhitong Financial APP, as an exogenous drug, one of the core barriers and technical difficulties of small nucleic acid drugs is the development of delivery systems. With strong R&D capabilities, Sirnaomics has developed four patent delivery platforms and is currently one of the three companies in the world with multiple technology platforms and products entering the clinical stage, which is in a leading position in the industry.
On the product side, Sirnaomics announced in June last year that STP705, a product candidate for the treatment of squamous cell carcinoma in situ (isSCC), entered the late-stage clinical development stage. Sirnaomics is also advancing a confirmatory clinical study of STP705 for the treatment of isSCC. STP705 has been in clinical trials for the treatment of isSCC and BCC in more than 100 subjects. Safety data from clinical studies for both cancer indications demonstrated that STP705 was safe with no grade 3 or higher adverse events. Preliminary efficacy data suggest that histologic clearance of cancer cells has been achieved in most treatment groups.
From a technical point of view, if Sirnaomics chooses to grant the commercialization rights of STP705, its potential value is still worthy of recognition, but from a commercialization perspective, it is still unknown whether other pharmaceutical companies are interested in the commercialization of small nucleic acid drugs.
Refer to the commercialization of the world's first siRNA drug and the first RNAi drug patisiran. Alnylam's Q3 2023 report shows that the number of patients using patisiran was officially surpassed by Vutrisiran in the third quarter of last year, and its sales were surpassed by Vutrisiran at the beginning of last year. This also means that Vutrisiran, a drug that was only launched in June 2022, replaced the previous generation of products within half a year and became Alnylam's latest revenue pillar. This can't help but make people doubt the technical iteration and commercial longevity of siRNA drugs, which may affect the market's value judgment of STP705, which is also a small nucleic acid drug.
Although Sirnaomics has previously stated that it has begun to work on commercialization, including the establishment of a commercialization team and the promotion of large-scale production. However, in the context of depleted cash flow, the research and development of core varieties is still in the medium term, and commercialization is impossible.
For Sirnaomics, it may be an urgent matter to continue the research and development of small nucleic acid drugs and find financing to stabilize the pre-commercialization stage.