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e-Therapeutics - Capital Network: Undervalued Stock with a Unique Approach to Drug Discovery

  1. e-Therapeutics (LON:ETX) focuses on the discovery of  new drugs in a more efficient and effective way and aims to be a valued partner to address the productivity challenge that the pharma industry faces.
  2. e-Therapeutics (LON:ETX) has developed a novel and unique in-silico approach to drug discovery: starting from the analysis of complex interactions between proteins in biological systems (networks), they apply advanced computational techniques to identify new drug candidates.
  3. This approach was labeled Network-driven Drug Discovery (NDD) and has been validated across several therapeutic areas (cancer, central nervous system, auto-immunity, infectious diseases) and molecular pathways.
  4. e-Therapeutics (LON:ETX) discovery platform has generated three drug candidates for multiple cancer indications which are ready to be out-licensed to pharma partners for their further development.
  5. We estimate e-Therapeutics intrinsic value to be roughly 3x higher than current market capitalisation. The latter doesn't reflect the commercial potential of e-Therapeutics' most advanced drug candidates and of the platform itself.
  6. e-Therapeutics ability to finalise a co-development or licensing agreement in the near term will represent a key inflection point for its stock re-rating.

Executive summary

Our model doesn't include any recurrent or non-recurrent income from potential licensing agreements that e-Therapeutics may sign over the coming months or years.
 
We focus on the ongoing operating expenses necessary to support the generation of further drug candidates, which we expect to be in the £7-8 million range in the next few years.
 
Our cash flow projection also take into account that the company receives cash tax credits worth approx. 1/3 of their R&D expenses.
 
As such, based on our forecast, e-Therapeutics has sufficient funds to support their ongoing discovery activities into the first half of calendar year 2019 (fiscal year ending Jan. 2020).

Quick facts: e-Therapeutics plc

Price: 3.34 GBX

AIM:ETX
Market: AIM
Market Cap: £8.98 m
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What's in the report?

Financial results and forecasts
Growth drivers
Management
Market conditions
Milestones & inflection points

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