Herantis: Valuation is attractive again

Translation: Original published in Finnish on 11/20/2025 at 7:00 am EET.

Herantis' share price has fallen in recent weeks after the rally that occurred around the publication of the Phase I results. We think that the valuation of the share has returned to an attractive level, so we raise our recommendation to Accumulate (was Reduce). There have been no changes in the company's outlook, so our view of the share's value remains unchanged. Therefore, we reiterate our EUR 2.5 target price.

Phase I readout results support the continuation of the trial

Herantis is developing its HER-096 candidate as a disease-modifying drug for Parkinson's disease. In the longer term, the company also sees opportunities for the asset to treat other neurodegenerative diseases, such as Alzheimer's disease. The aim of the Phase I trial has been to obtain information on the tolerability, safety and pharmacokinetics of the candidate, i.e. how the drug behaves in the body, as well as on appropriate dosing. According to the topline data published in October, the drug is well tolerated and safe in a limited group of healthy volunteers and patients with Parkinson's disease. The drug crossed the blood-brain barrier, meaning it reached the central nervous system. HER-096 also remained in the central nervous system for a sufficiently long time, which is a prerequisite for the drug to have the desired effect. Regarding dosage, the company believes that a 300 mg subcutaneous dose administered twice weekly is the best option for the next research phase. The trial was not designed to assess efficacy, so no conclusions can be drawn in this regard.

With the new results, our previous assessment of the drug's sufficiently good safety and tolerability received further support. In our opinion, the results clearly supported advancing to the next phase of development. Herantis plans to initiate the next clinical Phase II trial in 2026. The current study phase will be followed by a biomarker analysis by the end of the year. This analysis could help streamline drug development in future phases. In the longer term, commercialization of the drug requires favorable results from Phase II, which would justify large investments in the pivotal Phase III implementation. Extensive Phase III efficacy and safety studies will ultimately determine marketing authorization after regulatory review.

Funding is the key theme for the near future

The next significant step for the company is securing funding for the Phase II trial. Current funding will suffice until Q2'26. While the company has previously stated that it aims to enter into a partnership agreement with a larger pharmaceutical company, other financing options are also under consideration, according to the company. Good Phase I results contribute to increasing the probability of a successful partnership agreement.

With the price drop, the risk/reward ratio is again attractive

Our estimates remain unchanged, as there have been no changes in the company's outlook since the last earnings release. The probability of commercialization in our model is 14%. The still low probability of success is due to the upcoming Phase II and III studies, of which historically Phase II in particular has been the point of discontinuation for many drug candidates. In our view, the main uncertainty in the near future relates to financing the forthcoming Phase II trial.

Our DCF cash flow model still indicates a share value of EUR 2.5. The sharp share price decline in recent weeks has clearly improved the risk/reward ratio, and our required rate of return is once again exceeded.