SAR Sareum Drug Discovery Co.

OK. I'm over my Phil Taylor moment.

I certainly didn't sell any around the time of the AGM and have only added since the Genentech deal was announced most recently on 18 Dec at 0.819p.

I don't have anywhere near 3%! Remember, on this day last year I sold 1.5mn at 2.25p...I still wonder if I wasn't mostly to blame for the subsequent decline...

I do know that the 1 million sell on friday met a bid from a friend of mine. He got 500k straight away and another 500k late on. He is building a long too at what he thinks are attractive levels.

I think we should get a trading update much along the lines of that we saw last January giving some news on progress on existing collaborations and perhaps some new business from the Nov/Dec conference round.

In any event we are now just 40 trading days from the interim results.

By my estimates Sareum has 11 live deals (it may be + or - 2) and I do believe we may see quite a bit of newsflow in the next few weeks.

Here's the theory:

It took 224 days for Sareum to deliver (and receive milestone payments) on the first Schering deal. Since then the deals have apparently become more complex (more multiple target work) and in Tim Mitchell's words "with longer tenors".

Deadlines for news on the existing deals (amd these assume the Schering delivery time which may be too short) are:

Assuming 1 year contracts (therefore potential rollovers for some these deals if incomplete or requiring follow up work) the forecasts are:

Idenix 1 > 10th January 2007
Organon/Akzo > 17th January 2007
Lundbeck > 19th January 2007
UCB > 26th January 2007
Idenix II ($5mn deal) > 9th February 2007
Sirtris > Due between 3rd January - 20th June 2007.
Schering (ongoing after first milestones summer 2006).
Lundbeck II > Earliest 28th February 2007. Central Forecast 1 June 2007.
Almirall II > Earliest 26th JAnuary 2007. Central Forecast 29th April 2007.
ICRT/CRT - Compounds discovered August 2006 progression to pre-clinical nomination "Mid 2007".
Roche (>1 year deal) > Central Forecast August 2007 - February 2008
PIramed (> 1 year deal) > Central Forecast Sepetmber 2007 - April 2008
Genentech (1 year + option to roll for a further year worth up to $1.5mn) > Central Forecast July - December 2007.


So we have the potential for news. The optimist might say the quiet period indicates the focus on delivering.

I estimate that Sareum could earn somewhere between £3-6.5mn dependent on the success on the existing contracts. I think there will be more deals in Q1 which has historically been a busy quarter for deals.

My 2007 price projection for Sareum if things go well this year and the market is firm is between 2-4p although we may drift a little lower before.

I remain concerned that before we can realise the true value we might be taken out. But we have the substantial director holdings on our side here.

Happy New Year everyone.

A