Move over Neuren – Bioshares reckons these ASX health stocks could pop with upcoming key catalysts
Health & Biotech
Health & Biotech
Neuren Pharmaceuticals (ASX:NEU) has become the market darling of the biotech sector for 2023 after large pharma partner Acadia (Nasdaq:ACAD) announced in March that the US Food and Drug Administration (FDA) had approved trofinetide, now dubbed Daybue, for the treatment of Rett syndrome.
DAYBUE is the first approved treatment for Rett syndrome with its official launch in the US by Acadia in April.
Acadia recently provided encouraging early insights into the US launch of DAYBUE, expecting net sales of US$21-23 million in Q2 2023 and US$45-55 million in Q3 2023.
Furthermore, NEU recently announced it had received the upfront payment of US$100 million that was earned following the recent expansion of its partnership with Acadia for trofinetide to a worldwide exclusive licence.
In the extended agreement, the existing upcoming payments to NEU concerning trofinetide in North America will remain the same and can reach a maximum of US$350 million and are contingent upon achieving increasing levels of annual net sales.
Additionally, NEU will be entitled to tiered royalties ranging from 10% to 15% of net sales. Moreover, Neuren will receive one third of the value that Acadia gains from the Rare Pediatric Disease Priority Review Voucher, which was granted upon FDA approval of DAYBUE.
For trofinetide outside of North America, NEU has the potential to earn milestone payments for the first commercial sale, which could amount to US$64 million.
Further milestone payments, up to US$363 million, are also possible based on the attainment of increasing annual net sales thresholds. Additionally, NEU will be eligible for a percentage of tiered royalties ranging from the mid-teens to the early 20s of net sales.
The metrics sound good, especially to shareholders – and let’s put that in perspective. The NEU price, while down in line with broader markets over the past month, is up ~130% in the past year, surging more than 60% in the week of its initial FDA approval.
NEU is now a $1.55 billion company, expected to leap into the ASX 200 at the September rebalance. Furthermore, it has another catalyst coming up with Phase 2 clinical trial of NNZ-2591 in Phelan-McDermid syndrome with topline results forecast for December.
So apart from NEU, which other ASX biotech companies have important catalysts for the remainder of 2023? To find out, Stockhead caught up with Bioshares analyst Mark Pachacz.
The 17th Bioshares summit was recently held in Hobart, where Pachacz says there were several ASX companies discussing catalysts coming up in the next 12 to 18 months. Here’s some Pachacz thought were worth a mention.
Topping his list of stocks to watch with an upcoming key catalyst is eye disease specialist OPT. It’s conducting not one but two concurrent Phase 3 clinical trials with OPT-302 (drug name sozinibercept) for the treatment of wet age-related macular degeneration (Wet AMD) – a chronic eye disease that causes blurred vision or a blind spot in your visual field.
OPT-302 has demonstrated improved efficacy above the existing standard of care in a large Phase 2b study.
In its latest results OPT-302 was shown to have a novel mechanism of action and a favourable safety profile.
Goldman Sachs has a buy recommendation on OPT with a 12-month target price of $2.80 versus current price of 58 cents.
“It’s a bit of a sleeper because it’s doing such a long trial that started a couple of years ago but the results are due out mid next year and it could be the most significant event of the year for the sector I think,” Pachacz says.
He says there are two drugs available to treat the condition currently and a third off-label, together generating ~US$16 billion annually.
The FDA has granted OPT-302 fast track designation for the treatment of Wet AMD.
“There’s potentially a way to get a more durable treatment so it might mean less injections because you need to get an injection to the eye every six to eight weeks,” he says.
Last year OPT inked a deal with Launch Therapeutics (Launch Tx) to finance and advance the ongoing Phase 3 clinical trials and pre-commercialisation activities of OPT-302 for Wet AMD.
Launch Tx is a development company backed by funds managed by global investment firm Carlyle (NASDAQ:CG) and its life sciences franchise, Abingworth.
Carlyle and Abingworth, in collaboration with Launch Tx, committed to up to US$170 million for OPT.
As part of the deal, if OPT-302 is approved in a major market, OPT will make a milestone payment after regulatory approval and then six subsequent annual fixed success payments and variable success payments of 7% of net sales, with cumulative payments capped at four times the amount funded to OPT.
OPT retains full worldwide commercial rights for OPT-302 and has the option to prepay its obligations in full at any time.
“They didn’t sell equity but a portion of future profits from the drug if it gets approved so it’s quite unique for the Australian biotech landscape,” Pachacz says.
“They don’t own any shares in Opthea but they will get 25% of all the royalties up to four times what they invested.”
DXB’s Phase 3 trial is titled Angiotensin II Type 1 Receptor (AT1R) & Chemokine Receptor 2 (CCR2) Targets for Inflammatory Nephrosis – or ACTION3 for short.
ACTION3 is a pivotal multi-centre, randomised, double-blind, placebo-controlled trial of the efficacy and safety of DMX-200 in patients with Focal Segmental Glomerulosclerosis (FSGS) who are receiving a stable dose of an angiotensin II receptor blocker (ARB).
Once the ARB dose is stable, patients aged 18 to 80 years are randomised to receive either DMX-200 (120mg capsule twice daily) or placebo.
The global trial is broadening to 12 to 80 years following the first successful interim analysis, after the US confirmed inclusion of paediatric adolescent patients aged 12 to 17 was appropriate and recognised its appropriate safety profile.
Last patient data collection for the Phase 3 trial is scheduled for February 26, 2024 with first interim data outcome expected to be reported on, or around March 15, 2024.
A successful outcome in the first interim analysis outcome would see DXB announce a clinically significant and statistically meaningful improvement in proteinuria in patients on DMX-200 vs placebo and that the trial is continuing to Part 2.
Total FSGS market size across the seven major markets is estimated to be more than US$3 billion by 2032 driven by ~220,000 FSGS sufferers in those areas and premium orphan drug pricing.
DMX-200 has Orphan Drug Designation from the US FDA, EMA, and UK, enabling potential fast track of commercialisation upon successful results.
“That is going to be a huge result for them and they’re probably the one with the most near term catalyst in the sector,” Pachacz says.
“If that is a positive result then there will be licensing deals on the back of that if not done beforehand.
“That’s probably the question for the company whether they start to doing some regional deals before the results come out or they wait until the results come out in March and do a major deal then.”
Cardiac device company AVR is developing the world’s only balloon-expandable, single-piece transcatheter aortic valve called the DurAVR THV device.
AVR recently announced its trademarked device had been implanted in a second successful Valve-in-Valve (ViV) procedure as part of Health Canada’s Special Access Program (SAP).
A ViV procedure becomes necessary for patients where their existing bioprosthetic aortic valve is failing due to calcification or structural decline.
In such cases, a new heart valve must be inserted within the malfunctioning valve with the patients at a heightened risk for further surgical interventions and requiring a minimally invasive treatment choice.
Currently marketed products might result in patients remaining in an unhealthy state after the procedure, marked by unsatisfactorily high pressure gradients.
Canada’s Special Access Program (SAP) exists to enable the provision of life-saving technologies not yet commercially accessible in Canada, when no other available alternatives are appropriate.
Dr Janar Sathananthan, an interventional cardiologist at Vancouver General and St Paul’s Hospital, renowned globally for testing the hemodynamic impacts of different valves used in ViV procedures, has formally petitioned Health Canada to authorise use of DurAVR THV.
“It’s quite an exceptional company with a medical advisory board of the who’s who of the cardiovascular space,” Pachacz says.
He says AVR has had some exceptionally good results in an early feasibility study with plans for a pivotal study involving around 200 patients.
“There’s two main competitors – Edwards Lifesciences and Medtronic,” he says.
“So this company will probably get acquired at some point by one of those two companies, I would’ve thought.”
PXS recently disclosed findings of a final interim analysis involving 10 patients who underwent a six-month treatment of PXS-5505 for myelofibrosis, a type of bone marrow cancer.
The objective of the Phase 2 trial was to establish the safety and efficacy of PXS-5505, an inhibitor of all lysyl oxidase enzymes (LOX), as a standalone treatment for myelofibrosis patients who cannot tolerate, do not respond to, or are ineligible for other treatments.
The results indicate that PXS-5505 was well-tolerated, and no serious adverse events related to the treatment were reported.
The data also reveals encouraging signs of clinical effectiveness, such as improved symptom scores, stable or enhanced hematological parameters, and reduced bone marrow fibrosis.
“They’re about to move into a combination study and the results from that will be available towards the end of next year so that is certainly one to look out for,” Pachacz says.
“It’s ticking all the boxes at the moment.”
The cancer treatment company is developing several treatments that seek to harness and promote the body’s immune system against cancerous tumours.
Among its portfolio IMU has developed a B-cell immunotherapy called HER-Vaxx to address tumours characterised by heightened expression of the HER-2/neu receptor including gastric, breast, ovarian, lung, and pancreatic cancers.
Pachacz says IMU is on the record as looking at doing a licensing deal for its HER-Vaxx technology.
IMU has done positive Phase 2 studies for the technology in gastric cancer.
“Rather than having antibodies injected, they stimulate and train the immune system through a vaccine to produce its own antibodies,” he says.
“They’ve gone on the record as saying they not looking at conducting Phase 3 studies but more looking at licensing at the end of Phase 2 so investors should look out for a deal in the future.”
ACW’s lead compound Xanamem is being developed for Alzheimer’s Disease and depression, while the company hopes to also study Fragile X Syndrome and other neurological and psychiatric diseases.
“They’re developing a drug for Alzheimer’s Disease which is a really hot space at the moment,” Pachacz says.
While researchers are yet to determine a single cause for Alzheimer’s, ACW says there is strong evidence to support an association between excess cortisol – the stress hormone – and development and progression of the disease.
Increased age is the single biggest risk factor for developing Alzheimer’s, with more than half of cognitively normal 65 year-olds shown to have persistently raised cortisol, which appears a consequence of of normal aging.
Actinogen’s drug candidate Xanamem is designed to target and block production of cortisol inside neurons (cells) in the brain by inhibiting the activity of an enzyme, 11β-HSD1.
ACW is undertaking a Phase 2a proof-of-concept trial in Depression/Cognitive Impairment with 160 patient and results due in H1 CY24 and another Phase 2b confirmatory trial in mild-moderate Alzheimer’s disease with ~330 patients with interim analysis due in H2 2025.
“They have a 300-odd patient study with results due out in about a year and a half’s time,” Pachacz says.
“There’s a lot of interest in Alzheimer’s now with the first disease modifying drug approved by the US FDA called Leqembi, which was developed by Japanese company Eisai.”
Coming up: Finding an elusive cure for the common cold – our interview with Firebrick Pharma executive chairman Dr Peter Molloy as the company awaits Phase 3 Trial results on Nasodine Nasal Spray in treatment for the common cold.
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