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Investment case Modus Therapeutics: Significant potential with proven technology

7 Jul 2021

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Investment case Modus 7 July 2021

Drug candidate and areas of use

Modus has developed a drug candidate, sevuparin, for sepsis, or blood poisoning. Sepsis is a deadly disease that in its most dangerous stage, septic shock, has a mortality rate of about 30 percent for sick patients. There are no approved specific drugs against the condition, which thus categorizes the condition as an area of great unmet medical need. In septic shock, the permeability of organs’ blood vessels increases to extreme levels, causing them to be flooded with body fluids. This in turn leads to organ failure with devastating consequences for the patient. Sevuparin is thought to prevent the permeability of blood vessels from increasing in shock, which would prevent organ failure and drastically reduce mortality in sepsis and septic shock. Sevuparin is based on heparin, a drug from the 1930s that inhibits the blood’s ability to clot. Thus, many of the candidate’s characteristics are already known, which reduces the development risk.

Good clinical data from earlier studies

Sevuparin has already undergone a phase 2 trial in sickle cell anemia, which showed no effect. Thus, comprehensive safety data is already available. Phase 1 has already been completed with sevuparin with successful results. In principle, the company is currently ready for a phase 2 trial. However, the management believes that an initial phase 1b trial on healthy volunteers with simulated illness is a safer way to go than to start the phase 2a trial immediately. This is because such a phase 1b trial can provide information about the optimal dosage.

Great potential with significant risks

Although the company is in principle ready for a phase 2 trial, it is listed on a stock exchange as a preclinical company. This can be partly explained by the fact that the patent-protected period is relatively short and runs until 2032. However, the company expects to receive an extension of the patent until 2036-2037. The relatively short patent period is due to previously unsuccessful studies in the sickle cell track that cost the company several years in terms of development time within the then indication. However, it is not uncommon for drugs to find new uses during research, especially when they have such broad mechanisms of action that sevuparin could potentially be targeted. Overall, Modus pre-money valuation is clearly lower than the average for research companies in phase 1/2.

Great potential with significant risks

odus as an investment, like many other companies in the sector, is associated with big risks. In addition to the patentsituation, additional financing will probably be needed before outlicensing the candidate or selling the company. Despite this, we estimate a fair value of SEK 234 million, pre-money. This can be put in relation to the current offer with a pre-money valuation of SEK 70 million.


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Investment case Modus Therapeutics: Significant potential with proven technology