Biotech Values

[drbio45]

Exicure undervalued company in the RNA space


Exicure is the only company that can deliver RNA outside of the liver.

As you review the slide deck from the link below, please pay special attention to slide 25, which shows the valuation of Exicure compared to other companies in the RNA delivery space. So besides the fact that it can deliver RNA to more organs, it is also has a much lower valuation. Some of the companies on the list have no human data. On page 21 of the deck, you can see from the time that Exicure chose TNF alpha as a drug target, they were able to obtain human data in 18 months, for under 4 million dollars. This is unheard of in the pharmaceutical business.

https://exicuretxcom.ipage.com/assets/PDFs/Exicure_Corporate_Presentation.pdf

Below is a link to a press release discussing a pre clinical trial performed by Ohio State. These are the researchers that did the pre-clinical work for IONIS on Nusinersen. For the Ohio State researchers to successfully repeat and validate externally, the results that demonstrate the survival benefit of Ionis’ nusinersen was improved 4 fold, with less toxicity, by using Exicure’s SNA technology, is a profound differentiation from any of the other RNA companies.

http://investors.exicuretx.com/phoenix.zhtml?c=254193&p=irol-newsArticle&ID=2354533

Click on the pdf on the report below and you will see a chart showing the potency of Exicure's technology targeting TLR9, a major target in immune oncology.



<[e-mail]> September 20, 2018

EXICURE, INC.
AST-008 TLR9 Agonist Preliminary Data Indicates Superiority vs Linear ODN; Buy

Please click here for full report.

AST-008 Phase 1 data in healthy volunteers showed preliminary but encouraging data indicating superiority over its parent linear oligonucleotide TLR9 agonist CpG 7909 from Pfizer (PFE, $43.26, Not Rated). AST-008 uses the similar oligonucleotide sequence as CpG 7909 but presents in a spherical structure using XCUR's proprietary SNA (spherical nucleic acid) platform. In the FIH data released this morning, AST-008 was tested in a single ascending subcutaneous dose trial comprised of 16 healthy volunteers. AST-008 was shown to be safe and tolerable in all subjects, with no serious adverse events and no dose limiting toxicity. AST-008 was well tolerated and all AST-008-related adverse events were of short duration, reversible and consistent with TLR9 activation.
Importantly, for the 4 subjects receiving the trial’s top dose of ~20 µg/kg of AST-008, AST-008 was shown to elicit 9.5 fold and 3.5 fold increases in the fraction of activated T cells and NK cells, respectively, compared to baseline. There were also an increase of multiple TH1 type cytokines vs baseline: IFN-gamma: 3 fold; IL-12: 2 fold; IL-6: 57 fold; IP-10: 32 fold; and MCP-1: 4 fold. In contrast, its linear parent CpG 7909 didn't show T cell or NK cell activation, and no increase of IFN-gamma and IL-12 at the same Sub-Q dose in 6 healthy volunteers (Exhibit 1). CpG 7909 did also induce IL-6, IP-10 and MCP-1, but at a much lower magnitude of 8 fold, 9 fold and 3 fold, respectively. Similarly, in 13 healthy volunteer Phase 1 data reported for another linear TLR9 agonist Lefitolimod from Mologen (MGN, £ 5.25, Not Rated), no T cell or NK activation was reported and no increase of IFN-gamma, IL-12, IL-6 and MCP-1 was reported (only a 7-fold increase of IP-10 reported) at a much higher dose of 60 mg (923 ug/kg for a 60 kg subject) (Exhibit 1).
We see these preliminary data show a more potent immune activation profile of spherical AST-008 vs its linear parent oligonucleotide CpG 7909 as well as Lefitolimod, providing initial clinical evidence of higher potency of XCUR's SNA drug vs linear oligonucleotide counterparts, with the caveat of cross trial comparison and small pts number. Preclinically, XCUR's SNA version of another marketed linear oligonucleotide drug Nusinersen (Spinraza) also showed superior efficacy in SMA mouse models vs linear Spinraza (up to 35x higher potency and 4-fold increase of survival).
XCUR to start Phase 1b/2 trial of intra-tumorally dosed AST-008 + checkpoint inhibitor combo in 4Q18 with data expected in late 2019.The trial will begin with an AST-008 dose finding Phase 1b stage, followed by a Phase 2 expansion stage. In the Phase 1b phase, XCUR will enroll patients with superficial injectable tumors and will prioritize those with Merkel cell carcinoma, cutaneous squamous cell carcinoma, melanoma, and squamous cell carcinoma of the head and neck. Preliminary data from the Phase 1b stage are expected in late 2019. Maturing TLR9 agonists data of SD-101 from Dynavax (DVAX, $11.95, Not Rated), Tilsotolimod from Idera (IDRA, $8.28, Not Rated) and CMP-001 from Checkmate (Private) are showing promising synergy with anti-PD-1/CTLA4 checkpoint inhibitors by turning cold tumors to hot tumors. AST-008’s potential higher potency and subQ administration option may present competitive differentiation from these current linear TLR9 agonists.
Reiterate Buy rating. We are encouraged by the preliminary AST-008 Phase 1 data showing higher potency of XCUR's SNA drug vs linear oligonucleotide counterparts and providing initial clinical evidence for superiority of SNA platform vs linear oligonucleotide drugs.
Risks
In addition to normal economic and market risk factors that impact most all equities, XCUR is uniquely subject to risks typical for small- to mid-cap biotech companies: The products the company is developing may not work, may prove to be unsafe, may never win approval and may never generate meaningful revenues. Changing medical practices, a changing reimbursement environment and/or products introduced by others could shrink the market for the company’s products. The company may not be able to enforce its own patents or may find itself infringing on patents held by others.
The company has incurred substantial operating losses since inception. This trend may continue and the company may never become profitable. The company has not yet commercialized any of its drug candidates and cannot be sure if it will ever be able to do so. If it is unable to successfully complete clinical trial programs, or if such clinical trials take longer to complete than expected, its ability to execute on its current business strategy will be adversely affected. Pre-clinical testing and clinical development are long, expensive and uncertain processes. If drug candidates do not receive the necessary regulatory approvals, the company will be unable to commercialize its drug candidates. XCUR currently relies on third parties for GMP manufacturing of its products. If these third parties do not successfully manufacture and test the products, the company’s business will be harmed.
For a full review of XCUR specific risk factors investors should refer to the company’s most recent filings with the SEC.

Wangzhi Li, Ph.D.
Managing Director
Equity Research--Biotechnology
Ladenburg Thalmann & Co., Inc.
277 Park Avenue - 26th Floor
New York, NY 10172
Direct: 212.409.2051
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