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GNMX: Still Expect ADHD Data Mid-2018, Could Be Next Value-Inflection Point

11/06/2017
By Brian Marckx, CFA

NASDAQ:GNMX

Q3 Results / Operational Update
Aevi (NASDAQ:GNMX) reported financial results for their third quarter on November 2nd.  The operational update mostly relates to timelines of the various ongoing studies – while this includes an anticipated slight delay to the anti-LIGHT signal finding study in pediatric onset Crohn’s, it appears status of the two AEVI-001 programs (ADHD and ASD) remain largely inline with earlier expectations.

Relative to the financials, operating loss was $8.6M, almost 19% lower than the year-earlier period ($10.6M) but up by about $533k, or 7% from Q2 ($8.0M) of this year.  EPS was ($0.23), compared to ($0.29) in Q3 2016 and ($0.22) in the prior quarter.  

Cash
used in operating activities was $6.4M and $24.9M ($7.7M and $24.8M, ex-changes in working capital) in Q3 and the first nine months of 2017, respectively.  Cash balance at quarter-end was $15.0M but pro-forma for net proceeds from the equity sale in October (details below), cash balance was approximately $42M - which represents ~17 months (5 – 6 quarters) of operating capital at the current burn rate.  The company expects current cash to be sufficient to fund operations into 2019 – by that time they should have announced initial data from AEVI-001 phase II in ADHD and, possibly from AEVI-001 in pediatric onset Crohn’s (i.e. shares could be trading at a higher valuation by the time GNMX looks to raise additional capital).   

On October 17th GNMX closed on the sale of 22.2M common shares (via PIPE) at $1.26/share.  Investors, of which CHOP was the lead, also received 18% warrant coverage ($2.84 strike, 5 years).  The deal priced at a premium of about 3% versus the average trading price in the 10-days preceding announcement of the proposed transaction in August.  CHOP will commit an additional $5M by 6/30/18 if certain conditions are met.  

Relative to the operational update, there were no data read-outs or any new trial initiations anticipated during Q3 so most of the discussion surrounding development-related activities remains the same since our update in August.  As noted, timelines have also remained mostly static, with the exception of topline data from the AEVI-002 phase Ib POC study in pediatric onset Crohn’s, which is now not anticipated before mid-2018 (prior expectation was Q4 ’17 or Q1 ’18).    

As a reminder, in August GNMX unveiled their game-plan for AEVI-001 (i.e. mGluR+ network), which includes somewhat of a parallel approach; the company is forging ahead with trials in both ADHD (looking at all 9 genes of interest, but also parsed for just CNTN4) and ASD (just CNTN4).  Management believes that this parallel approach will provide "optionality" in terms of deciding which program to pursue first in pivotal studies and (hopefully) eventual commercialization.  The ADHD study, per the Q3 earnings release on November 2nd, has initiated patient screening.  Design of the ASD study continues.  Initial ADHD data as well as kick-off of an ASD study are both still expected to happen by mid-2018. 

Meanwhile, difficulty in identifying and enrolling patients for the AEVI-002 anti-Light pediatric onset Crohn’s proof-of-concept study has hampered early progress in that program.  This appears to continue to be a headwind as the revised mid-2018 target for initial data “is highly dependent on timely recruiting; thus, continued difficulties in recruitment could cause a delay in the delivery of initial data for the program.”  While the delays are disappointing, the relatively low prevalence of the disease is likely a significant factor.  Moreover, the regular updates help in setting expectations and should provide at least some transparency-related comfort.     

Upcoming Milestones: 

AEVI-001 (mGluR+) Update and Next Steps

ADHD:  As a reminder, in March 2017 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 in August 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 (“part A”) followed by the 8-gene cohort (N = ~21) (‘part B”).  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 started during Q3.  Management still hopes to have topline data (from at least the CNTN4 cohort, i.e. “part A”) by mid-2018.    

We continue to like the chances for success with the study redesign (as compared to SAGA).  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 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 1H 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 after both of these studies read out.      
 
Anti-LIGHT Severe Pediatric Onset Crohn’s Phase 1/2 Signal Finding Study

While the Anti-LIGHT program in pediatric onset 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 or without 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 Crohn's Disease Activity Index.  Aevi now hopes to have initial data by mid-2018 (depending on pace of enrollment), at which point they will decide whether to continue development (via their license with Kirin).    

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