Considerable progress in first year since listing

Cizzle Biotechnology (Cizzle), focused on cancer diagnostics, was spun out of the University of York to exploit the biomarker, variant CIZ1b, for the early detection of different forms of lung cancer. While implementing this strategy over the past year, Cizzle’s interest has been broadened to include early detection of other cancers and companion diagnostic tests that can assist in the development and use of personalised medicines. In the 12 months since listing, Cizzle has secured key partners to generate monoclonal antibodies (mAb) and reagents for a commercial test, and signed licensing and royalty deals.

• Strategy: Cizzle is a diagnostic company that is progressing a biomarker diagnostic assay, which aims to deliver a simple blood test for lung cancer that can pick up the disease earlier to improve the chances of survival, and to greatly reduce the need for unnecessary follow-up tests and tissue biopsies.
• Progress: Since listing, Cizzle has generated mAb with key suppliers and developed reagents, optimised assay conditions needed for a commercial test, and signed development and commercial deals in the key markets of China and the US. It has also expanded potential long-term income streams through royalty deals.
• Valuation: Our DCF model has been updated to reflect timing of launch, market opportunity and commercial deals for the key markets of China and the US These revisions generated a risk-adjusted value of £15.9m for the test. Adding in the value of royalty agreements gives a sum-of-the-parts valuation of £23.0m.
• Risks: Cizzle is a small company with limited resources. Development of a commercial test kit for lung and other cancers is dependent on the optimisation of the mAbs and reagents and validation in a small trial. Development and commercial deals in key territories have greatly reduced R&D costs and risks.
• Investment summary: Since listing, Cizzle has delivered a stream of positive news, particularly the collaborations and strategic partnerships that accelerate the number and magnitude of potential income streams. Delivery of the detector mAbs and reagents for the commercial test was a significant milestone, and triggers the development in China and the US. Despite this news, the shares are underappreciated, leaving the company trading on an EV of just £3.0m.