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Hardman & Co

Incanthera: Solid progress since listing

Incanthera plc (AQSE:INC) is a spin-out from the Institute of Cancer Therapeutics at the University of Bradford to exploit development opportunities generated by ICT. This has provided the company with its core pro-drug delivery platform technology, to which additional technologies/products have been acquired, all focused on producing better clinical outcomes for cancer patients. With the new capital raised when it listed on the Aquis Growth Exchange in February 2020, INC has further advanced the development of its refined Sol formulation towards the point where it can be out-licensed to a partner for commercialisation.

  • Strategy: INC is a specialist oncology company using a novel pro-drug approach to deliver cytotoxic warheads directly to tumour cells. It intends to develop drugs to a suitable valuation inflection point and then out-license them for late-stage trials, in return for development milestones and royalties.
  • Interims: 1H’20 has been characterised by careful control of the corporate overhead allowing resources to be focused on the development of Sol. Consequently, SG&A decreased 12% to -£297k (-£338k), while investment in R&D was substantial -£155k (-£0k). Gross cash at 30 June was £433k.
  • Sol progress: Solid progress has been made with the development of Sol during 1H’20, with independent studies showing that it permeates the skin at least as well as established commercial products and that it is “non-irritant” in sensitivity tests, which means that it is both comfortable and safe to use topically.
  • Risks: Investments in small, early-stage pharmaceutical companies carry a significant risk, and additional capital will be required for future expansion of clinical programmes. This additional capital may come from commercialisation of Sol, and/or INC may need to raise more capital in the future.
  • Investment summary: Incanthera offers distinct technology with the potential to attract the attention of the majors, especially given management’s strategy to out-license products early. The early focus has been on the patent-protected, value-added, sun cream, which represents a relatively quick and low-risk cosmetics project. The current EV suggests that there is good upside potential when comparing INC with a group of UK-listed peers working in the same field.

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