Broker JP Equity says PharmAust has multiple avenues to $US 1 billion+ success

PharmAust’s clinical trials in canine cancers, human cancers, Covid-19 and MND/ASL could lead to multi-billion dollar opportunities, according to broker JP Equity.

Leading broker JP Equity Partners believes that clinical stage biotech PharmAust (ASX:PAA) has now approached an inflection point in its development.

JP points to the several clinical trials that PharmAust will commence in FY23 – three of which are Phase 2/3 trials – which could represent multiple avenues to billion dollar drug opportunities.

A short-term successful corporate outcome is also possible according to JP, which may involve licensing or sale of monepantel (MPL)’s veterinary applications in canine cancers. A partnership with Big Pharma could also be possible ahead of these canine Phase 3 trials.

In other indications, success in PharmAust’s Phase 2 COVID-19 trial could result in a substantial addressable market, with current estimates at around US$10 billion.

The ALS/MND addressable market meanwhile, is a US$3.6 billion market. The current standard of care therapy Riluzole has already reached ~US$1 billion in annual sales.

But according to JP, the biggest market of them all, and the one that is very much in play with clinical outcomes in canines facilitating rapid translation to humans, is the ‘Blue Sky’ US$125 billion human cancer industry.

Blue sky opportunity in human cancers

Recent data from PharmAust’s B-Cell Lymphoma cancer trial in canines suggests positive correlation, and possible translation, for targeting multiple different cancers in humans.

With recent positive results from the Phase 2a and Phase 2b canine studies, PharmAust is now ready to commence the Phase 2 human cancer trials.

According to JP, if MPL human trials return similar efficacy as in canines, this would be an absolute game changer and major entry into the US$125 billion human cancer industry.

And with so much at stake, PharmAust’s canine results are now starting to be recognised internationally.

Clinical interest and offers to PharmAust for focussed Phase 1/2 trials in leukaemia, glioblastoma, oesophageal, gastrointestinal, ovarian and pancreatic cancers., are being received from the UK, Italy and US.

These offers highlight the inflection point that PharmAust now finds itself, and puts the company in a very good position to commercialise MPL’s use in veterinary cancers in the short-term, and then in human cancers thereafter.

What is monepantel?

PharmAust’s MPL is a novel, potent and non toxic inhibitor of the mTOR (mammalian Target Of Rapamycin) pathway, a pathway that is key in influencing cancer growth.

It effectively suffocates cancers of its key proteins that prevent cell growth, whilst simultaneously promoting autophagy which works towards preserving the body’s healthy cells, including the mopping up of dying cancer cells.

Apart from cancer, the drug has also shown positive reaction to neurodegenerative diseases and viral activity.

According to JP, the global mTOR inhibitor market exceeds US$2.5 billion annually.

MPL itself was developed by Novartis under the name Zolvix as an anti-parasitic in the livestock industry in 1994. Back then, Novartis had demonstrated extensive clinical data showing MPL to be highly safe and non-toxic to the immune system.

As a repurposed drug, MPL is now already registered in 38 countries as well as being TGA approved.

Apart from the substantial time and cost savings of repurposing marketed drugs, MPL’s non-toxic nature could provide a significant advantage over existing oncological and neurodegenerative therapies.

The non-toxic nature also preserves the recipients’ immune system from obliteration, which is a side effect commonly seen in chemotherapy and rapamycin alternative.

What this means is that it allows for higher MPL dosages, potentially resulting in better quality of life outcomes.

Crucial trials are underway

The canine Phase II results in B-Cell Lymphoma have shown MPL to be a very safe drug that promotes a high quality of life for the pets.

Eight dogs that were treated post-trial using ongoing MPL in combination with standard of care, prednisolone, have to date provided median and average survival times of approximately 140 days (or 20 weeks).

JP believes that a licensing deal would be most amenable to PharmAust for the canine drug, allowing PAA the ability to deal with the veterinary cancer application, and leave the company fully funded for any future human cancer trials.

Typically, a licensing deal involves an upfront cash payment, plus remuneration of costs spent on developing the drug which would now be around $20m—$25m, as well as a 10-12% royalty on all sales of the drug.

Such a deal would mark a significant commercial outcome for PharmAust, and see it more than fully funded for all foreseeable future clinical trials.

The Phase 2 COVID-19 trial meanwhile is expected to commence in the next few months following receipt the Phase 1 MND trial PK data.

PharmAust has signed an agreement to evaluate MPL in “humanised” mice, which will express the receptors that the COVID-19 virus binds to in humans.

Efficacy in the anti-viral model will provide further evidence of the anti viral effects of MPL.

Work continues in MND fight

And finally, the $880k funded Phase 1 Motor Neurone Disease/Amyotrophic Lateral Sclerosis (MND/ALS) trial could identify MPL as a potential therapy for MND/ALS.

MND/ALS is a rare and fatal neurodegenerative disease that slowly attacks the brain and nerves over time. The MND trial has commenced and is open for patient recruitment in Sydney and Melbourne.

The trial sponsor, FightMND, wishes to measure markers in spinal fluid of sufferers to observe if MPL can reduce protein markers, and whether a combination therapy could extend life and even decrease symptoms.

All of these trials represent multiple pathways to commercialisation and potential billions of dollars in addressable markets for PharmAust, says JP Equities. It is a pivotal 12 month period for PharmAust, a potential “company maker”.

This article was developed in collaboration with PharmAust, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.