In this report, we update our valuation for Molecure. Our new FV is PLN 23.2ps, implying 8% upside vs. the current price. We maintain a HOLD recommendation. Molecure's OATD-02 immuno-oncology program successfully entered phase I clinical trials in early 2023, and we expect initial safety and efficacy data at higher doses in 4Q23. The company's lead program, OATD-01, appears on track to enter the phase II clinical trial in sarcoidosis later this year. After Molecure to filed an application with the FDA to start this program, we expect approval in 3Q23 and first dosing in 4Q23.
We believe the monetization of both assets is a key story for Molecure in 2024-25E, but first the company has yet to secure funding for development beyond 1Q24. In our opinion, the stock issue scenario is the most likely; recently the annual general meeting authorized the management to issue up to 2.8m new shares. Despite the positive development of the clinical program, we expect the share price to remain under pressure due to this upcoming potential share offering.
OATD-01 to start phase II trial in sarcoidosis in 2023E. Molecure submitted IND motion to the US regulator FDA to start phase II of OATD-01 in sarcoidosis. Molecure targets starting a phase II study in patients in the US and the European Union in 4Q23, while the results will be available in 1H25.
As the start of phase II clinical trials is approaching, we removed part of the discount on the success rate due to the uncertainty surrounding Galapagos’ termination. We value OATD-01 at PLN 8.7ps, while with no discount it would be valued at PLN 16.5ps. OATD-02 started clinical trials, first partial results in 4Q23. In March, Molecure dosed the first patient in phase I clinical trials of OATD-02.
The company plans 5- 6 cohorts in a dose escalation study with 30-40 patients recruited in three Polish centers with advanced or metastatic solid tumors. Molecure says it will present data regularly after each cohort. We believe data from higher doses will be critical as it could show initial efficacy and safety data that could be a catalyst for a potential partnering on this program, which we think could take place in 2024E. We value the OATD-02 program at PLN 14.5ps. AGM authorized new share issue.
Molecure AGM authorized management to issue up to 2.8m new shares (20% dilution) implying an SPO value of up to PLN 60-65m. The company has cash secured until 1Q24. We believe that a new share issue is the most probable source of financing the development of OATD-01 and OATD-02; in our view it may take place in 3/4Q23.
We believe that a potential decision of the main shareholder to participate in the share issue would be a supportive factor for the equity story. Recommendation and valuation. We reiterate our HOLD rating for Molecure with a new FV set at PLN 23.2, implying 8% upside vs. the current price.
