Sareum Holdings plc

Summary

Sareum Holdings plc is a biopharmaceutical company that specialises in discovering and developing new therapeutic drugs. The company focuses primarily on cancer and autoimmune diseases and is known for leveraging its proprietary drug discovery platform to identify and design new small molecule compounds with therapeutic potential.

The company is based in the United Kingdom and operates mainly in the pre-clinical and early clinical phases of drug development. Sareum seeks to partner with larger pharmaceutical organisations to advance its compounds through the development pipeline and into commercialisation.

Operations

How the idea of the company came about?

Sareum Holdings plc was conceptualised from the aim to discover and develop innovative therapeutic drugs for cancer and autoimmune diseases. It emerged from the identification of the need for more targeted and effective treatments within these widespread and impactful health conditions.

Mission

The mission of Sareum Holdings is to leverage its proprietary drug discovery platform to generate novel small molecule therapeutic candidates that can provide significant improvements over current treatment options for patients suffering from cancer and autoimmune diseases.

Main offerings

1. Discovery and development of innovative small molecule drugs.
2. Therapies targeting cancer and autoimmune diseases.
3. Partnership opportunities for co-development and commercialisation of its drug candidates.
4. Research and development services to identify and develop kinase inhibitors.

Current strategy

The current strategy of Sareum Holdings plc revolves around advancing its lead drug development programs to clinical trials, securing partnerships with pharmaceutical entities to enhance development and commercialising efforts, and continuing research to expand its portfolio of therapeutic candidates.

Team

The key players at Sareum encompass experienced individuals with a strong background in biopharmaceuticals, research, and development. Notably, the team consists of:

1. Dr. Tim Mitchell - CEO, expertise in drug discovery and development.
2. Dr. John Reader - CSO, oversees research and development activities.
3. Michael Owen - Non-executive Chairman, brings extensive leadership experience.
4. Other scientific experts and experienced professionals in finance and operations.

Market

Sareum Holdings plc operates in the biotech and pharmaceutical market, focusing on the discovery and development of innovative drugs for cancer and autoimmune diseases. Its market can be further segmented as follows:

1. Oncology Market: Sareum focuses on developing therapies targeting cancers with significant unmet medical needs. The company seeks to address various forms of cancer through its drug development programs.
2. Autoimmune Disease Therapeutics Market: Sareum is also engaged in creating treatments for immune-mediated diseases, tapping into the growing demand for new and effective autoimmune therapies.
3. Research and Development: Sareum operates in the R&D sector of pharma, with its efforts in early-stage discovery and partnerships with other pharmaceutical entities to further drug development and commercialisation.

Its target market is global, with a focus on regions that have strong patent protections and established regulatory frameworks for drug approval, such as the United States, Europe, and parts of Asia. As Sareum's products progress through clinical trials, its market potential also includes partnerships with larger pharma companies for further development and distribution.

Competition

Sareum Holdings plc operates in the biopharmaceutical industry, particularly focusing on the discovery and development of innovative drug candidates aimed at cancers and autoimmune diseases. The competitors of Sareum Holdings plc typically include other biotech and pharmaceutical companies working on similar drug targets or within the same therapeutic areas. Some of these competitors might be:

1. AstraZeneca plc
2. GlaxoSmithKline plc
3. Roche Holding AG
4. Novartis AG
5. Merck & Co., Inc.
6. Bristol Myers Squibb Company
7. Incyte Corporation
8. Nektar Therapeutics
9. Blueprint Medicines Corporation

It is important to note, however, that the competitive landscape is dynamic and can change as companies progress through drug development, achieve regulatory approvals, form strategic partnerships, or shift its research focus.

Financials

Financials

Year	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30
Total
Revenue ($1,000s)
Orphan Drug Tax Credits	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Product Revenue	-	-	-	-	-	-	-	-	-	786,126	1,619,419	1,668,002	1,718,042	1,769,583	1,822,671	1,877,351	1,933,671	1,991,681	2,051,432	2,112,975	-	-	-	-	-	-	-	-	-	-
Costs ($1,000s)
Manufacturing & Marketing (0%)	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
In-licensing Royalty (75%)	-	-	-	-	-	-	-	-	-	589,594	1,214,564	1,251,001	1,288,531	1,327,187	1,367,003	1,408,013	1,450,253	1,493,761	1,538,574	1,584,731	-	-	-	-	-	-	-	-	-	-
Clinical Trials	-	3,000	7,500	7,500	25,000	25,000	25,000	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Animal Studies	-	1,000	1,000	1,000	1,000	1,000	1,000	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
FDA Fees	-	-	-	-	-	-	-	619	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
NDA/BLA Preparation Fees	-	-	-	-	-	-	-	1,000	1,000	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Overheads	4,000	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Net Cash Flow	-            4,000	-            4,000	-            8,500	-            8,500	-             26,000	-             26,000	-             26,000	-               1,619	-               1,000	196,531	404,855	417,000	429,510	442,396	455,668	469,338	483,418	497,920	512,858	528,244	-	-	-	-	-	-	-	-	-	-
NPV	636,856	736,984	852,132	989,727	1,147,961	1,350,055	1,582,463	1,849,733	2,129,055	2,449,563	2,590,987	2,514,052	2,411,609	2,279,413	2,112,570	1,905,438	1,651,515	1,343,312	972,200	528,244	-	-	-	-	-	-	-	-	-	-
Risk-added Cash Flow	-          40,000	-          20,000	-          28,333	-          28,333	-             38,806	-             38,806	-             38,806	-               1,999	-               1,235	196,531	404,855	417,000	429,510	442,396	455,668	469,338	483,418	497,920	512,858	528,244	-	-	-	-	-	-	-	-	-	-
rNPV	53,946	133,276	236,801	282,096	746,348	888,200	1,051,330	1,497,811	1,724,345	2,449,563	2,590,987	2,514,052	2,411,609	2,279,413	2,112,570	1,905,438	1,651,515	1,343,312	972,200	528,244	-	-	-	-	-	-	-	-	-	-
SDC - 1801
Development Stage	Preclinical	Phase 1	Phase 2	Phase 2	Phase 3	Phase 3	Phase 3	Approval	Approval	Ramp	Ramp	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent
Likelihood of Reaching Revenue	10%	20%	30%	30%	67%	67%	67%	81%	81%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%
Revenue ($1,000s)
Orphan Drug Tax Credits	-	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Product Revenue	-	-	-	-	-	-	-	-	-	393,063	809709.619	834000.907	859020.934	884791.56	911335.31	938675.37	966835.63	995840.7	1025715.9	1056487.4	0	0	0	0	0	0	0	0	0	0
Costs ($1,000s)
Manufacturing & Marketing (0%)	-	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
In-licensing Royalty (75%)	-	-	-	-	-	-	-	-	-	294,797	607282.214	625500.68	644265.701	663593.67	683501.48	704006.53	725126.72	746880.52	769286.94	792365.55	0	0	0	0	0	0	0	0	0	0
Clinical Trials	-	1,500	3,750	3,750	12,500	12,500	12,500	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Animal Studies	-	500	500	500	500	500	500	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
FDA Fees	-	-	-	-	-	-	-	310	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
NDA/BLA Preparation Fees	-	-	-	-	-	-	-	500	500	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Overheads	2,000	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Net Cash Flow	(2,000)	(2,000)	(4,250)	(4,250)	(13,000)	(13,000)	(13,000)	(810)	(500)	98,266	202,427	208,500	214,755	221,198	227,834	234,669	241,709	248,960	256,429	264,122	-	-	-	-	-	-	-	-	-	-
NPV	318,428	368,492	426,066	494,863	573,981	675,028	791,232	924,866	1,064,528	1,224,782	1,295,493	1,257,026	1,205,804	1,139,707	1,056,285	952,719	825,758	671,656	486,100	264,122	-	-	-	-	-	-	-	-	-	-
Risk-added Cash Flow	(20,000)	(10,000)	(14,167)	(14,167)	(19,403)	(19,403)	(19,403)	(1,000)	(617)	98,266	202,427	208,500	214,755	221,198	227,834	234,669	241,709	248,960	256,429	264,122	-	-	-	-	-	-	-	-	-	-
rNPV	26,973	66,638	118,401	141,048	373,174	444,100	525,665	748,905	862,172	1,224,782	1,295,493	1,257,026	1,205,804	1,139,707	1,056,285	952,719	825,758	671,656	486,100	264,122	-	-	-	-	-	-	-	-	-	-
SDC - 1802
Development Stage	Preclinical	Phase 1	Phase 2	Phase 2	Phase 3	Phase 3	Phase 3	Approval	Approval	Ramp	Ramp	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Revenue	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent	Off Patent
Likelihood of Reaching Revenue	10%	20%	30%	30%	67%	67%	67%	81%	81%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%
Revenue ($1,000s)
Orphan Drug Tax Credits	-	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Product Revenue	-	-	-	-	-	-	-	-	-	393,063	809709.619	834000.907	859020.934	884791.56	911335.31	938675.37	966835.63	995840.7	1025715.9	1056487.4	0	0	0	0	0	0	0	0	0	0
Costs ($1,000s)
Manufacturing & Marketing (0%)	-	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
In-licensing Royalty (75%)	-	-	-	-	-	-	-	-	-	294,797	607282.214	625500.68	644265.701	663593.67	683501.48	704006.53	725126.72	746880.52	769286.94	792365.55	0	0	0	0	0	0	0	0	0	0
Clinical Trials	-	1,500	3,750	3,750	12,500	12,500	12,500	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Animal Studies	-	500	500	500	500	500	500	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
FDA Fees	-	-	-	-	-	-	-	310	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
NDA/BLA Preparation Fees	-	-	-	-	-	-	-	500	500	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Overheads	2,000	-	-	-	-	-	-	-	-	-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Net Cash Flow	(2,000)	(2,000)	(4,250)	(4,250)	(13,000)	(13,000)	(13,000)	(810)	(500)	98,266	202,427	208,500	214,755	221,198	227,834	234,669	241,709	248,960	256,429	264,122	-	-	-	-	-	-	-	-	-	-
NPV	318,428	368,492	426,066	494,863	573,981	675,028	791,232	924,866	1,064,528	1,224,782	1,295,493	1,257,026	1,205,804	1,139,707	1,056,285	952,719	825,758	671,656	486,100	264,122	-	-	-	-	-	-	-	-	-	-
Risk-added Cash Flow	(20,000)	(10,000)	(14,167)	(14,167)	(19,403)	(19,403)	(19,403)	(1,000)	(617)	98,266	202,427	208,500	214,755	221,198	227,834	234,669	241,709	248,960	256,429	264,122	-	-	-	-	-	-	-	-	-	-
rNPV	26,973	66,638	118,401	141,048	373,174	444,100	525,665	748,905	862,172	1,224,782	1,295,493	1,257,026	1,205,804	1,139,707	1,056,285	952,719	825,758	671,656	486,100	264,122	-	-	-	-	-	-	-	-	-	-

Assumptions

Description	Value	Commentary
SDC - 1801
Orphan drug?	No	Orphan if <200,000 U.S. patients
Preclinical
Duration	1
Annual Cost	$2,000,000	8 Scientists at $250,000 per scientist
Likelihood of Reaching Revenue	10%
Clinical Phase 1
Duration	1
Number of Subjects	60	20-80
Cost Per Patient	$25,000	$8,000-15,000
Animal Studies Phase 1	$500,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	20%	20% for a chemical pharmaceutical
Clinical Phase 2
Duration	2
Number of Subjects	300	100-300
Cost Per Patient	$25,000	$8,000-15,000
Animal Studies Phase 2	$1,000,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	30%	30% for a chemical pharmaceutical
Clinical Phase 3
Duration	3
Number of Subjects	3000	1,000-5,000
Cost Per Patient	$12,500	$4,000-7,500
Animal Studies Phase 3	$1,500,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	67%	67% for a chemical pharmaceutical
Approval
Duration	2	0.5-1 for fast-track
FDA Fees (PDUFA II)	$309,647
NDA/BLA Preparation Fees	$1,000,000	$500,000-1,000,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	81%
Financials
Patient Population	2,000,000
Annual Revenue Per Patient	$13,000
Peak Market Penetration	3%
Patient Polpulation Growth Rate	2%
Ramp to Market Peak	2	Maximum 4 Years
Discount Rate	15%
In-licensing Royalty Rate	75%
Manufacturing and Marketing Offset	0%
Year Patent Protection and Revenues End	21
Annual Ramp Overhead (Other Costs)
Annual Peak Revenue Overhead (Other Costs)
SDC - 1802
Orphan drug?	No	Orphan if <200,000 U.S. patients
Preclinical
Duration	1
Annual Cost	$2,000,000	8 Scientists at $250,000 per scientist
Likelihood of Reaching Revenue	10%
Clinical Phase 1
Duration	1
Number of Subjects	60	20-80
Cost Per Patient	$25,000	$8,000-15,000
Animal Studies Phase 1	$500,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	20%	20% for a chemical pharmaceutical
Clinical Phase 2
Duration	2
Number of Subjects	300	100-300
Cost Per Patient	$25,000	$8,000-15,000
Animal Studies Phase 2	$1,000,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	30%	30% for a chemical pharmaceutical
Clinical Phase 3
Duration	3
Number of Subjects	3000	1,000-5,000
Cost Per Patient	$12,500	$4,000-7,500
Animal Studies Phase 3	$1,500,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	67%	67% for a chemical pharmaceutical
Approval
Duration	2	0.5-1 for fast-track
FDA Fees (PDUFA II)	$309,647
NDA/BLA Preparation Fees	$1,000,000	$500,000-1,000,000
Annual Overhead (Other Costs)
Likelihood of Reaching Revenue	81%
Financials
Patient Population	2,000,000
Annual Revenue Per Patient	$13,000
Peak Market Penetration	3%
Patient Polpulation Growth Rate	2%
Ramp to Market Peak	2	Maximum 4 Years
Discount Rate	15%
In-licensing Royalty Rate	75%
Manufacturing and Marketing Offset	0%
Year Patent Protection and Revenues End	21
Annual Ramp Overhead (Other Costs)
Annual Peak Revenue Overhead (Other Costs)

Risks

As with any investment, investing in Sareum carries a level of risk. Overall, based on the Sareum's adjusted beta (i.e. 0.25), the degree of risk associated with an investment in Sareum is 'low'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'low' risk, it must have a beta value of less than 0.5. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to unfavourable outcomes from its clinical trials (i.e. clinical trials risk).

Drug development risk

1. Clinical Trials: The success of Sareum relies heavily on the results of clinical trials. Unfavorable outcomes can impact the company's value.

2. Regulatory Approval: There is no guarantee that Sareum's products will receive the necessary regulatory approvals, which are essential for commercialisation.

Financial risk

1. Funding Requirements: Sareum may require additional financing to continue its operations, which could dilute existing shareholders or lead to increased debt.

2. Revenue Dependence: As a biotech company, Sareum may have limited sources of revenue and could be heavily reliant on the success of a single product or a small portfolio of products.

Market and competition risk

1. Market Competition: Sareum operates in a highly competitive industry, and any advances by competitors can impact its market position.

2. Market Penetration: Successfully commercialising products requires effective marketing and sales strategies, which can be challenging for smaller companies.

Intellectual property risk

1. Patent Protection: The ability of Sareum to protect its intellectual property through patents and prevent infringement is crucial to its success.

2. Dependence on Licensing: Sareum's operations might depend on licenses from third parties, which could be subject to renegotiation or termination.

Operational risk

1. Management Team: Sareum's success is partly dependent on the expertise and experience of its management team. Any changes could disrupt operations.

2. Research and Development: The lengthy and uncertain R&D process in the biotech field poses significant operational risks.

External risks

1. Economic Conditions: Economic downturns can affect the availability of capital and the overall investment climate.

2. Regulatory Changes: Changes in healthcare laws, policies, and regulatory environment can pose compliance challenges and affect profitability.

Valuation

What's the expected return of an investment in the company?

The Stockhub users estimate that the expected return of an investment in the company over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in five years time. The assumptions used to estimate the return figure can be found in the table below.

What are the assumptions used to estimate the return?

Key inputs

Description	Value	Commentary
Which valuation model do you want to use?	Discounted cash flow	Research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that he Stockhub users suggest to use here; nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the using the relative valuation approach (the valuation based on the relative approach can be found in the appendix of this report).
Which financial forecasts to use?	Stockhub	The only available long-term forecasts (i.e. >15 years) are the ones that are supplied by the Stockhub users (the forecasts can be found in the financials section of this report), so the Stockhub users suggest using those.
Discount rate (%)	5.98%	There are two key risk parameters for a firm that need to be estimated: its cost of equity and its cost of debt. A key way to estimate the cost of equity is by looking at the beta (or betas) of the company in question, the cost of debt from a measure of default risk (an actual or synthetic rating) and apply the market value weights for debt and equity to come up with the cost of capital.
What's the current value of the company?	£25.65 million	As at 24th February 2024, the current value of its company at £25.65 million.
Which time period do you want to use to estimate the expected return?	Between now and five years time	Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years. Accordingly, Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

Appendix

Sareum Holdings adjusted beta calculation

Date	iShares MSCI World ETF unit price (USD)	Sareum share price (GBP)	iShares MSCI World ETF unit price change (%)	Sareum share price change (%)
01/03/2019	88.79	38.75
01/04/2019	92.09	37.5	3.72%	-3.23%
01/05/2019	86.76	29.75	-5.79%	-20.67%
01/06/2019	91.02	21.75	4.91%	-26.89%
01/07/2019	91.86	20.5	0.92%	-5.75%
01/08/2019	89.84	17	-2.20%	-17.07%
01/09/2019	91.78	19.25	2.16%	13.24%
01/10/2019	94.12	17	2.55%	-11.69%
01/11/2019	96.76	18.25	2.80%	7.35%
01/12/2019	98.78	17.75	2.09%	-2.74%
01/01/2020	97.73	20.5	-1.06%	15.49%
01/02/2020	89.67	15.75	-8.25%	-23.17%
01/03/2020	77.93	19	-13.09%	20.63%
01/04/2020	86.36	43.25	10.82%	127.63%
01/05/2020	90.7	34.75	5.03%	-19.65%
01/06/2020	92.14	26.25	1.59%	-24.46%
01/07/2020	96.65	46.75	4.89%	78.10%
01/08/2020	102.96	44.25	6.53%	-5.35%
01/09/2020	99.52	40.25	-3.34%	-9.04%
01/10/2020	96.53	110	-3.00%	173.29%
01/11/2020	108.94	75	12.86%	-31.82%
01/12/2020	112.41	121.25	3.19%	61.67%
01/01/2021	111.49	93.75	-0.82%	-22.68%
01/02/2021	114.27	87.5	2.49%	-6.67%
01/03/2021	118.49	88.75	3.69%	1.43%
01/04/2021	123.61	112.5	4.32%	26.76%
01/05/2021	125.6	130	1.61%	15.56%
01/06/2021	126.57	287.5	0.77%	121.15%
01/07/2021	128.83	435	1.79%	51.30%
01/08/2021	132.02	367.5	2.48%	-15.52%
01/09/2021	126.46	327.5	-4.21%	-10.88%
01/10/2021	133.84	320	5.84%	-2.29%
01/11/2021	131.1	305	-2.05%	-4.69%
01/12/2021	135.32	245	3.22%	-19.67%
01/01/2022	128.32	200	-5.17%	-18.37%
01/02/2022	124.58	167.5	-2.91%	-16.25%
01/03/2022	128.16	120	2.87%	-28.36%
01/04/2022	117.42	220	-8.38%	83.33%
01/05/2022	117.94	217.5	0.44%	-1.14%
01/06/2022	106.88	202.5	-9.38%	-6.90%
01/07/2022	115.57	190	8.13%	-6.17%
01/08/2022	110.28	167.5	-4.58%	-11.84%
01/09/2022	99.95	192.5	-9.37%	14.93%
01/10/2022	107.42	142.5	7.47%	-25.97%
01/11/2022	115.44	87.5	7.47%	-38.60%
01/12/2022	109.25	82.5	-5.36%	-5.71%
01/01/2023	117.01	105	7.10%	27.27%
01/02/2023	113.98	100	-2.59%	-4.76%
01/03/2023	117.67	87.5	3.24%	-12.50%
01/04/2023	119.79	114.5	1.80%	30.86%
01/05/2023	118.6	115	-0.99%	0.44%
01/06/2023	124.52	125	4.99%	8.70%
01/07/2023	128.54	105	3.23%	-16.00%
01/08/2023	125.7	72.5	-2.21%	-30.95%
01/09/2023	120.17	80	-4.40%	10.34%
01/10/2023	117.11	62.5	-2.55%	-21.88%
01/11/2023	127.78	62.5	9.11%	0.00%
01/12/2023	133.02	59.5	4.10%	-4.80%
01/01/2024	134.2	46.5	0.89%	-21.85%
01/02/2024	140.33	37.5	4.57%	-19.35%
23/02/2024	140.33	37.5	0.00%	0.00%

Peel Hunt beta and adjusted beta value

	Beta	Adjusted beta	Comment(s)
Consistent (monthly) intervals between data points	-0.12416	0.25056

Cost of equity

Cost of equity (%)

Input	Input value	Additional information
Risk-free rate (%)	4.371%	Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 25th February 2024. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
Beta	0.25056	Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.
Equity risk premium (%)	6.41%	Here, the equity risk premium is in relation to the global region, and is calculated as at 5th January 2024. Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium.
Cost of equity (%)	5.98%	Cost of equity = Risk-free rate + Beta x Equity risk premium.

Beta risk profile

Beta value	Risk rating
0 to 0.50	Low
0.50 to 1.50	Medium
1.50 to 3.00	High
3.00 and above	Extremely high