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GNMX: AEVI-001 Data Mid-2018, Next Value Inflection Point?

08/28/2017
By Brian Marckx, CFA

NASDAQ:GNMX

Q2 Results / Update: New mGluR+ ADHD, ASD Studies Kick-Off, Data ~Mid-2018

Aevi (NASDAQ:GNMX) reported financial results and provided an update on their various clinical programs.  

Relative to the financials, operating loss was $8.0M, down considerably from both the year-earlier ($11.7M) and quarter-earlier ($10.9M) comparable periods.  EPS was ($0.22), compared to ($0.35) in Q2 2016 and ($0.29) in Q1 of this year.  

Cash used in operating activities was $7.9M and $18.5M ($7.2M and $17.1M, ex-changes in working capital) in Q2 and 1H 2017, respectively.  Management anticipates that the quarter-end cash balance, of $21.4M, is sufficient to fund operations until ~mid-2018, at which point they also expect to have reported topline data from the recently initiated ADHD/CNTN4+ phase II trial and initial data from a too-be-initiated proof-of-concept study for their anti-LIGHT candidate in pediatric Crohn's.

However, the recently-announced $28M (gross) equity raise, if consummated, would extend the cash runway into 1H 2019.  Subject to shareholder approval, GNMX will issue 22.2M common shares (via PIPE) at $1.26/share. The deal is expected to close in Q4 of this year.  Investors, of which CHOP was the lead, will also receive 18% warrant coverage ($2.84 strike, 5 years).  The deal is priced at about a 3% premium to the average prior-10-day trading price.  CHOP will commit an additional $5M by 6/30/18 if certain conditions are met.  

Relative to the operational update, study designs and timelines were unveiled for the phase II mGluR/CNTN4+ADHD study and for a proof-of-concept II CNTN4+ASD study.  The current game-plan includes somewhat of a parallel approach with the AEVI-001 program (i.e. mGluR+ network) whereby GNMX will forge ahead with trials in both ADHD (looking at all 9 genes of interest, but also parsed for just CNTN4) and ASD (just CNTN4).  Management noted that this parallel approach should provide "optionality" in terms of deciding which program to pursue first in pivotal studies and (hopefully) eventual commercialization. 

Management also provided an update on the anti-LIGHT phase I study in pediatric Crohn's, which has suffered from ongoing delays due to recruitment headwinds but which could finally start to bring initial patients in.  If all goes to plan, initial data from the POC anti-LIGHT study could be available later this year and read-out from AEVI-001 in ADHD could happen by mid-2018.  

Upcoming Milestones:      

AEVI-001 (mGluR+) Update and Next Steps

ADHD:  As a reminder, in March GNMX announced that while secondary data was positive, SAGA (i.e. the phase II mGluR+ ADHD study) failed to meet the primary endpoint.  Then in April the company announced additional data from SAGA which showed that ADHD patients which had mutations to nine of the 273 genes in the mGluR network showed a clinically and statistically significant response to AEVI-001 based on the primary and secondary endpoints.  (See below for link to our full report for further history of AEVI-001 development). 

In May GNMX announced plans for a new phase II study (dubbed "ASCEND") which will enrich for this high-responder population – that is, for mutations to CNTN4 and eight specific (still undisclosed) GRMs and neurodevelopmental genes.  The study design is very similar to that of SAGA, with certain exceptions in that ASCEND will; include younger subjects and have two distinct treatment cohorts.  On the Q2 call (which we missed due to a timing conflict) on August 8th management provided additional details of the study design;

➢ Multi-center (~20) randomized (1:1), placebo-controlled
➢ Ages 6 – 17 (i.e. younger population should reduce placebo response) is expected to make up ~75% of total enrollment
➢ Enrollment will be in sequential stages with CNTN4 patients (N = ~32) enrolling first followed by the 8-gene cohort (N = ~21).  A third group (N = ~41), with no genetic mutation, could follow (depending on guidance from FDA)  
➢ Treatment protocol (similar to SAGA): 4-week dose optimization (100-400mg), followed by 2-week dose maintenance
➢ Endpoints (similar to SAGA); primary: ADHD-RS-5, secondary: CGI-I 

The staged adaptive design allows for both super-enrichment (our word) as well as for assessing response on the broader 9-gene population.  Given the particularly robust response from CNTN4 patients in SAGA, this could be the low-hanging fruit in terms demonstrating clinically significant response in this follow-on study, although also represents about 50% of the prevalence among the general ADHD population as compared to the full 9-gene subset.  Clearly, an important objective is to assess clinically significant response within a broader population (i.e. 9 genes), however, given that it represents a significantly larger potential commercial market as compared to the CNTN4+ population.  This follow-on study should provide additional insight in that regard.  As a reminder, the 9-gene subset data from SAGA was quite compelling - demonstrating statistical significance on the primary and key secondary endpoints. 

In order to facilitate enrollment Aevi is incorporating prescreening methods and utilizing a several-pronged approach to recruit patients.  Patient screening is expected to commence in Q3 (i.e. current quarter) - while this is a slight delay from prior expectations, the company still hopes to have topline data (from at least the CNTN4 cohort) by mid-2018.    

We continue to like the chances for success with the study redesign.  For one, while SAGA did not meet the primary endpoint, the data was nonetheless reasonably strong.  This includes meeting statistical significance on the CGI-I secondary endpoint as well as on the ADHD-RS responder measure.  Additionally, the ADHD-RS inattention subscale, just barely missed statistical significance (p=0.0515).  And, importantly, AEVI-001 was deemed to be well tolerated with no associated serious adverse events.  So ASCEND effectively begins with a baseline that barely missed statistically significance and enriches for the highest responders.  
  
As a reminder, SAGA showed that among those patients (n=42: 18 AEVI, 24 placebo) which had copy-number variation (i.e. mutations) to one of these nine genes of interest had a much higher and statistically significant response to AEVI-001 – which included the primary endpoint as well as CGI-I and ‘responder’ secondary measures.  The response appeared to be even more robust among those patients (n=18: 6 AEVI, 12 placebo) with mutations to CNTN4.   

We also think the pediatric population should further enhance the chances for success.  SAGA was an adolescent study (12 – 17 years).  There could be several advantages relative to improving upon efficacy by going to a pediatric study (6 – 12 years) including that mGluR network mutations are more prevalent in pediatric population (~26%) as compared to adolescents (~20%) and inattentiveness is more pronounced in younger ADHD subjects.  The ADHD-RS inattention subscale just barely missed statistical significance in SAGA – since a pediatric study should further enrich for inattention, presumably it would improve upon the chances of AEVI-001 showing statistical significance on total ADHD-RS score.  And, finally, protocol compliance (including dosing, particularly BID dosing) is more likely to suffer among adolescent clinical trials as compared to pediatric trials given the typical greater of oversight by parents of younger children – this can result in a greater placebo response in adolescent, as compared to pediatric, studies.  

Autism Spectrum Disorder:  CNTN4 mutations have also been associated with more severe phenotypes and other disorders including Autism Spectrum Disorder.  Management referenced study data which has indicated 65% - 85% of individuals with ASD also have ADHD.   Using the CHOP database, Aevi found that approximately 6% - 8% of ASD patients have the CNTN4+ mutation.  The company is now committed towards moving forward with an ASD program as well.  Program specifics are still being worked out but initial thoughts are to start with a an open label dose-ranging (100 - 400mg) study in young (i.e. 6 - 17 years) CNTN4+ patients with randomized-withdrawal-to-placebo design (affording initial comparator data).  Proposed endpoints would include clinically relevant ASD measures (specifics still being determined) as well as ADHD scales, such as ADHD-RS and CGI-I (SAGA and ASCEND endpoints).  Aevi hopes to have the study protocol finalized for initiation in Q1 2018.  

AEVI-001 Subsequent Steps:  Aevi hopes to use read-out of ASCEND and the ASD proof-of-concept study to help in determining subsequent steps forward for the AEVI-001 program.  While the data may be the most substantive factor, other considerations including financial resources, time-to-market and near-term opportunity may also be significant considerations.  The much smaller population of pediatric ASD/CNTN4+ (~75k U.S.) versus that of ADHD/9-gene-mGluR+ (~600k U.S.) or ADHD/CNTN4+ (~300k U.S.) (all our estimates), relative symptom-severity of ASD and lack of alternative therapies, could mean an ASD (orphan) indication may be a particularly attractive pursuit to lead with. But, we should know more about potential subsequent steps forward when both of these studies read out.      
 
Anti-LIGHT Severe Pediatric Crohn’s Phase 1/2 Signal Finding Study

While the Anti-LIGHT program in pediatric Crohn's (AEVI-002) has been plagued by persistent delays due to extreme difficulties in recruiting and enrolling patients, screening at the primary site (CHOP IBD center) finally kicked off in late June.  Two additional sites have been identified in order to facilitate enrollment.  Management also indicated that they are also considering modifying some of the enrollment criteria (in particular, not restricting inclusion only to early-onset), if needed to aid recruitment.

As a reminder, these are patients with severe pediatric onset IBD with DcR3 loss-of-function mutations (10% - 15% of pediatric onset Crohn's patients have this DcR3 mutation) and which have failed anti-TNF alpha therapy.  Anticipated to enroll 8 to 12 patients over the age of 18.  Clinical endpoints are endoscopic evaluation (i.e. healing) and the Pediatric Crohn's Disease Index.  Aevi hopes to have initial data in the Q4 '17 or Q1 '18 (depending on pace of enrollment) timeframe, at which point they will decide whether to continue development (via their license with Kirin).     

READ THE FULL RESEARCH REPORT HERE

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