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PULM: Pulmatrix Broadens Its Pulmonary Portfolio With Addition of In-Licensed Janssen Compound for COPD

08/03/2017
By Anita Dushyanth, PhD

NASDAQ:PULM

On June 13, 2017, Pulmatrix (NASDAQ:PULM) announced the addition of a portfolio of novel inhaled narrow spectrum kinase inhibitor (NSKI) anti-inflammatories (PUR1800 and PUR5700) from RespiVert, a wholly owned subsidiary of Janssen Biotech, Inc.  Terms of the licensing agreement remain undisclosed.  The addition of PUR1800 and PUR5700 will expand the company’s pulmonary franchise to include treatments for COPD, IPF and asthma.

Background Indication: COPD 
Respiratory diseases affect roughly 300 million people globally and COPD was the 3rd leading cause of death in the U.S. in 2014  The incidence of COPD is higher in people who smoke and in places where people are exposed to noxious respiratory particles in the atmosphere.  The direct and indirect healthcare costs in COPD are primarily related to treating exacerbations which reach $50 billion annually in the US alone1.  Further, the costs to treat an individual patient rise dramatically with the increasing frequency of exacerbations that accompany COPD progression.  Since hospital re-admissions for COPD exacerbations are common and cost intensive, healthcare strategies focus on optimal therapeutic strategies to prevent and/or limit the severity of exacerbations. 

Hallmarks of COPD include airway obstruction and inflammation.  Inflammation in COPD is generally steroid resistant due to the activation of multiple inflammatory pathways, many of which are driven by infection with viruses or bacteria.  The inflammatory response may increase the frequency and/or intensity of exacerbations which may play a role in COPD progression.  Further, individuals with a propensity for frequent exacerbations are more prone to a rapid decline in respiratory function.

As per the 2017 GOLD guidelines, COPD treatment commences with LAMA therapy (in group C) and treatment is escalated to ICS plus LABA therapy as necessary. Similarly, initiating therapy on both bronchodilators for symptom control before adding an ICS is recommended by the available data.  Since the pathophysiology of COPD is complex, there is a pressing need for the development of new therapies for COPD particularly, as no existing treatment has shown reduction in disease progression. 

GOLD also offers clear guidelines for managing disease to prevent or reduce the severity of acute exacerbations of COPD (AECOPD).  The 2017 GOLD guidelines outline treatment algorithms for the treatment of AECOPD at the time of an exacerbation with the goal of limiting losses in lung function and managing patients back to a stable state.  AECOPD treatment commences with increased dose and / or frequency of short acting bronchodilators (e.g. SABA and/or SAMA) followed by use of oral corticosteroids in events that are considered moderate or severe.  Antibiotics are used if there is evidence of bacterial infection.  

Despite well defined diagnosis and treatment guidelines, there is significant unmet need in COPD indicated by morbidity/mortality data and cost to the healthcare system.  Specifically, while oral steroids represent the current standard of care for treating inflammation associated with AECOPD, oral steroids are effective in only a fraction of AECOPD (i.e. eosinophilic) with limited efficacy in treating AECOPD caused by viral and bacterial infection.  Therefore, there is a significant unmet need for non-steroidal approaches to managing inflammation in COPD patients.

Narrow Spectrum Kinase Inhibitors
Structural and inflammatory cells are activated in COPD lungs via many different kinases.  One hypothesis for the lower suppression of inflammation in COPD is reduced levels of a histone deacetylase enzyme  (HDAC2).  The reduction in HDAC2 is postulated to result from the activation of phosphoinositide-3-kinase δ. The development of kinase blockers along multiple signal transduction pathways is a promising approach for potential new anti-inflammatory treatments.  

Studies have shown kinase inhibitors to be useful in the treatment of inflammatory diseases, such as rheumatoid arthritis and inflammatory bowel diseases.  With inflammatory disease being a significant problem in the lung, kinase inhibitors are also being investigated as a potential new drug class for COPD   which target the chronic inflammatory process , .  Kinase inhibitors have not yet been approved for clinical use in asthma and COPD and have not yet reached Phase 3 studies.
 
Since kinases are found in many different types of cells in the body, it poses a limitation to administering kinase inhibitors orally due to concerns with systemic side effects.  There have been considerable challenges in developing the kinase inhibitors as most inhibitors target the TP-binding site instead of the catalytic site which is well conserved between them.  This implies that the kinase inhibitors are often poorly selective and have an impact on other off-target sites which increases the risk of adverse events.  Therefore, a work around to this challenge is to develop narrow spectrum kinase inhibitors that are inhaled rather than orally administered to the lungs.  This should result in a large reduction in systemic exposure, while delivering an effective amount of the drug to the primary site of inflammation.  

In order to achieve this targeted goal, the ideal candidate drug will have high potency and low oral bioavailability.  In addition, inhaled delivery provides the opportunity to enhance kinase inhibition in the lung while reducing unwanted systemic effects of systemic kinase inhibition.  
Many different kinases have been found to be activated in COPD: p38 MAP kinases, JAK kinases, Src kinases and Syk kinases.  Previous studies have shown that NSKIs restore steroid sensitivity through inhibition of p38 MAP kinases (p38MAPK).  They also prevent viruses and bacteria from stimulating p38MAPK to drive inflammation and mucus hypersecretion, which directly lead to exacerbations in COPD patients and block growth factor mediated activation of primary lung fibroblasts.  

PUR1800 Program: Inhaled NSKI for COPD
PUR1800 inhibits steroid resistant inflammatory processes induced by a variety of stimuli including cytokines, pathogens and free radical stressors such as cigarette smoke. PUR1800 would be the first known triple kinase inhibitor.  Unlike oral steroids, PUR1800 impacts P38, Src and Syk kinase and is hypothesized to provide anti-inflammatory effect in eosinophilic, bacterial and viral induced AECOPD.

Clinical Development

Study #1: A double-blind placebo controlled study was conducted to investigate the safety and tolerability of single and repeat inhaled doses of PUR1800 in healthy subjects and subjects with moderate to severe COPD (GOLD II/III).  Systemic PK exposure and the effects of repeat inhaled doses of PUR1800 on markers of inflammation in sputum from COPD subjects were also evaluated in healthy and COPD subjects.  Seventy-eight subjects (38 healthy and 40 with COPD) were recruited at a single investigator site in the UK.  PUR1800 was delivered via a DPI at doses of 100µg and 500µg for 14 days.  PK was measured on Days 1, 7 and 14.

Results: PUR1800 was found to be well tolerated in heathy subjects and in those with moderate to severe COPD.  The drug demonstrated low, dose proportional systemic exposure.  PUR1800 demonstrated target engagement after dosing COPD subjects with 500µg for 14 days.  COPD subjects dosed with 500µg had a reduction in phosphorylated p38 (p-p38) levels in sputum cells (p=0.01) and had a reduction in sputum neutrophil numbers on Day 12 compared to baseline (p=0.02). Total sputum cell (p=0.02) & sputum macrophage (p=0.04) numbers also decreased (data not shown).  Subjects dosed with 100µg had a trend towards a reduction in p38 phosphorylation (p = 0.084). COPD subjects dosed with 100µg also demonstrated statistically significant changes in MMP12 (p=0.001), IL-13 (p=0.02), MCP1 (p=0.03) and MDA (p=0.04) in sputum supernatant (data not shown). No difference between PUR1800 and placebo treated patients was observed on spirometry or plethysmography measures. No deaths or serious adverse events (SAEs) were reported.

PUR1800 Therapeutic Development

The initial trial showed that PUR1800 can reduce the inflammatory burden in COPD patients completed using a lactose blend dry powder of the molecule in PUR1800.  PUR1800 is being reformulated using the iSPERSE technology and is targeted for a 14-day Phase IIA study in COPD patients with similar end points to the trial completed by Janssen/Respivert that is anticipated in 2H 2018.  Demonstration of target engagement and measure of anti-inflammatory biomarkers will be the primary readouts in the study along with safety and tolerability.

Based on the results from this Phase IIA trial, Pulmatrix plans to move directly into a Phase IIB Proof-of-Concept trial in COPD patients.  This subsequent trial could address the impact of PUR1800 as a possible treatment of acute exacerbations of COPD (AECOPD) as well as inform the potential of the agent to prevent exacerbations of COPD.  Subsequent trials could also address the impact of this treatment when used acutely at the time of an AECOPD in conjunction with the standard of care to determine if this treatment will be effective across all AECOPD phenotypes.  As part of future development consideration, PUR1800 could also be evaluated in a prevention of exacerbation paradigm in longer term trials. 
p38 MAP kinase inhibitors in development

These molecules have mainly focused on p38 inhibition.  Mereo Biopharma, a clinical stage, UK-based, biopharmaceutical company is developing Acumapimod, an orally active compound for AECOPD as a first line of therapy.  Previous studies undertaken by Novartis showed that acumapimod demonstrated a statistically significant reduction of the inflammatory marker TNFα and a clinically meaningful increase in forced expiratory volume in one second (FEV1), a clinically relevant endpoint in the treatment of COPD. In studies to date, acumapimod has been shown to be safe and well tolerated in the target patient population.  Top-line data from a double-blind, placebo-controlled Phase 2 dose-ranging study of acumapimod is expected in the second half of 2017.

Glaxo Smith Kline’s GW856553, or losmapimod, was tested in a 12-week randomized double-blind study in COPD patients. An oral dose of losmapimod, 7.5mg b.i.d., was compared with an inhaled corticosteroid (ICS)-LABA dry powder (Advair ®) or placebo. The primary endpoint, sputum neutrophils, was not reduced by either active treatment.  However, plasma fibrinogen was modestly, but statistically reduced in the losmapimod arm.  However, in January 2016, GSK pulled the plug on another Phase 3 trial with losmapimod for acute myocardial infarction (heart attack) after disappointing trial results.

Pfizer’s once daily oral agent PH-797804 was tested in a 6-week dose-ranging study in COPD patients.  Each of several doses resulted in improvements of trough FEV1 that were statistically significant and around 75 ml better than placebo. There were also meaningful improvements in dyspnea index, a modest decrease in the use of rescue medication and reductions in high sensitivity C-reactive protein. However, levels of clara cell secretory protein CC16, IL-6, surfactant protein-D and fibrinogen were unchanged. Although some nausea and headaches were seen, other adverse events were not a problem.  Pfizer subsequently discontinued this program.

The above candidates are all oral inhibitors as compared to PULM’s inhaled drug candidate, and in most cases development is focused on the long term chronic use of these compounds to prevent exacerbations.  PUR1800 is different in terms of the triple kinase inhibition profile and since inhaled pharmacologic therapy is the cornerstone of COPD treatment, these patients may especially benefit from the use of Pulmatrix’s drug candidate

IPF
Indication: Idiopathic Pulmonary Fibrosis (IPF) is a progressive and fatal disease (the cause of which is unknown) that scars the lungs thereby causing an irreversible loss of the ability of the lung tissue to transport oxygen. 

Current Treatment Options: Two recently approved drugs, Ofev (nintedanib) and Esbriet (pirfenidone) offer therapeutic options for IPF patients in the U.S.  Both Ofev and Esbriet are oral therapies and commonly cause gastrointestinal side effects that could be severe depending on the patient.  Pharmaceutical giants such as Bristol-Myers Squibb (BMY) and Biogen (BIIB) are developing oral and injectable therapies for IPF that are in Phase 2 clinical trials.  

Market Potential: IPF kills about 40,000 people in the U.S. annually.  It is estimated that over 200,000 people in the U.S. and EU suffer from IPF ,  , which represents a viable commercial market and offers the potential for orphan drug status.  Given the underserved market, the potential for the currently marketed products is expected to be in the billions of dollars annually.  With the limitations of the currently approved oral therapies, innovative inhalation approaches to IPF treatment such as that offered with Pulmatrix's iSPERSE technology could have the opportunity to capture significant share of the market. 

PUR5700, an inhaled NSKI is in preclinical development.  While PUR5700 could also have therapeutic potential in COPD and severe Asthma, preclinical data demonstrate the potential of PUR5700 as a novel anti-inflammatory for IPF.  The premise of inhalation as a better route of delivery for IPF drugs has been established in preclinical studies.  Pulmatrix has evaluated use of iSPERSE in IPF and Respivert also did early pre-clinical work to evaluate PUR5700 in IPF as well.  Pulmatrix is confident in these leading indicators and intends to evaluate PUR5700 in iSPERSE in appropriate preclinical models of IPF as a first step in the next 12 months.

Pulmatrix Pipeline and Development Timeline

Management seems to be taking a disciplined approach to developing the respiratory portfolio with a number of potential catalysts over the next 12-15 months.  The clear priority is advancing both PUR1900 and PUR1800 into the clinic with clinical milestones in 2018.
 
Pulmatrix’s most advanced product PUR0200 is a Spiriva® HandiHaler® branded alternative for the US and substitutable product in the EU.  Following favorable guidance from two European regulatory authorities, Pulmatrix is actively engaged in out-licensing future clinical development and commercialization.
 
Pulmatrix also acquired PUR5700 from RespiVert (Janssen) and, while it is a pre-clinical pipeline program, it is promising given its potential in markets of asthma, COPD and IPF that are valued at over $25 billion in the aggregate.  We expect Pulmatrix's focus will initially be with bringing PUR1900 and PUR1800 to market with the iSPERSE technology, with PUR5700 likely on the back-burner for now as an early stage partnering opportunity.  

PUR1900 will begin Phase IB in Q1 2018. Oral Itraconazole has been studied in severe asthmatics with ABPA and demonstrated efficacy.  The planned Phase IB study will be an important milestone as the company hopes to demonstrate a favorable safety, tolerability and PK profile for PUR1900, the iSPERSE reformulation of Itraconazole, in comparison to the oral form of the drug. 

PUR1800 is being developed as a novel anti-inflammatory for treatment of AECOPD.  In the PUR1800 Phase 2A study, the company intends to bridge the encouraging results from the Phase 1B studies run by Janssen showing effectiveness, signals of anti-inflammatory benefit, safety and tolerability. If all goes well the company is targeting a Phase 2A study in 2H 2018 with completion targeted around the end of the year. If a PUR1800 Phase 2A study confirms earlier findings and continues to demonstrate positive results, it could lead into a Phase IIB proof-of-concept trial for exacerbations in COPD patients which would be very positive for PULM.

We estimate an approximate 18 month timeline for completion of the Phase IIB follow on trial.  Based on statistics and studies , a Phase 2 trial in the respiratory space costs on average approximately $12 million.    Since the terms of the licensing agreement remain undisclosed, we model Pulmatrix to bear the development costs and think any proceeds from potential future revenue of PUR1800, are subject to tiered royalty payments (undisclosed) to RespiVert.

Valuation
With the new assets added to the portfolio, what is Pulmatrix worth today?  PULM is addressing the COPD market that has a patient population of about 65 million worldwide.  At least a third of these patients experience acute exacerbations once annually . Further, since COPD patients are susceptible to many insults that can rapidly snowball into an acute deterioration in lung function, this chronic disease is complex and requires aggressive and prompt intervention.  Although the company’s candidates are in the pulmonary space, particularly COPD, PUR0200 is a branded generic of a once-daily long-acting muscarinic antagonist (LAMA) that is a bronchodilator and PUR1800 is an NSKI that addresses inflammation in COPD.  We think this unique opportunity might enable Pulmatrix to positively impact the lives of more patients globally while generating attractive returns for investors.  Together the two programs position Pulmatix for sustainable long-term growth in respiratory therapeutics.

PUR1800 and PUR 1900 are in mid-stage development.  We expect operating expenses to remain elevated during the coming years as a result of ongoing R&D and regulatory activities for the PUR 1800 and PUR 1900 product candidates.  We expect that Pulmatrix will need sufficient capital for conducting PUR1800 Phase 2 studies as well as for initial business development.  The Phase 2 trial may need to be completed before PUR1800 becomes an asset that can be partnered.  

We use a Discounted Cash Flow (DCF) analysis and revised our financial model following the addition of the new assets.  We have not included PUR5700 in our current valuation as this program is at a very early stage in development.  Our model and assumptions will be updated based on progress in its development plan and could prompt a revision to our forecast, particularly as it relates to our out-years.  We derive the total equity value of PULM to be approximately $182 million with a target price of $7.50/share, implying an upside to the current trading price.  

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