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KEY TAKEAWAY Probiodrug announced that it has received a $15m grant from the National Institutes of Health ("NIH") to partially fund the Phase IIb trial for PQ912, a small molecule glutaminyl cyclase ("QC") inhibitor in development for Alzheimer's disease ("AD"). In addition to providing much needed cash, it provides a strong endorsement for the development of PQ912 in early AD, particularly taking into account that obtaining an NIH grant is a highly competitive process. Preparations for the US Phase IIb trial are ongoing and a pre-IND meeting with the FDA is in the process of being scheduled. The European Phase IIb trial is due to start anytime in 2019E once the necessary funds are obtained. Based on current cash reserves (excluding the NIH grant), Probiodrug is able to fund operations until the end of Q3/2019E. We continue to see positive risk / reward for the shares and retain our OUTPERFORM recommendation. US Phase IIb trial preparations ongoing, pre-IND meeting with FDA the next step At the H1/2018 results in September 2018, Probiodrug estimated that the US Phase IIb trial would cost approx. $50m. However, we note that the budget remains uncertain until the protocol is finalised following feedback from the FDA. The next step is a pre-IND meeting with the agency in the coming weeks, with an IND expected to be submitted later this year. The first patient could be enrolled in Q1/2020E, provided additional financing is obtained during the course of 2019. European Phase IIb trial ready to start as soon as funding obtained Probiodrug had previously said that the first patient visit for the European Phase IIb trial was expected to take place by YE2018E, provided the necessary funds were obtained. We understand that all third parties Probiodrug has engaged to run this trial are ready to go and that this will be the case until at least YE2019E, meaning that patient recruitment can commence as soon as funding is secured. The European trial is estimated to cost around half as much as the US trial due to the lower number of patients to be enrolled (250 vs. 460) and the shorter duration (12 vs. 18 months). PQ912 - differentiated approach to AD focused on toxic Abeta oligomers The AD space has been fraught with many late-stage failures, particularly with regard to beta amyloid ("Abeta")-focused approaches. This has made many companies and investors reluctant to invest in the space. That said, there has been tremendous progress in the understanding of AD biology, and multiple lines of evidence including recent positive Phase II data from BioArctic's / Eisai's / Biogen's BAN2401 point to neurotoxic Abeta aggregates as the key driver of AD pathogenesis. PQ912 inhibits the formation of toxic oligomers by inhibiting the QC enzyme, and as such prevents the formation of insoluble fibrils that aggregate to form plaques. In addition, as a small molecule, PQ912 is able to cross the blood-brain-barrier, while <1% of mAbs are able to cross over. Encouraging Phase IIa data already published As a reminder, PQ912 has already successfully completed a Phase IIa trial which demonstrated target engagement, dose / response relationship and preliminary efficacy, among others, including a significant improvement on the "one card back" test which reflects an effect on working memory and attention. Kind regards,
goetzpartners Healthcare Research Team | Research Team goetzpartners securities Limited The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK. T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com / healthcareresearch@goetzpartners.com www.goetzpartnerssecurities.com goetzpartners securities LinkedIn page Registered in England No. 04684144. Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.
Equity Research Analysts - Martin Brunninger, Brigitte de Lima, Chris Redhead and Martin Piehlmeier.
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