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GNMX: ASCEND Timeline On-Track, Topline ~Mid-2018. Additional Pipeline Expansion

03/22/2018
By Brian Marckx, CFA

NASDAQ:GNMX

Aevi (NASDAQ:GNMX) reported financial results for their fourth quarter on March 13th.  The operational update covered the two AEVI-001 programs (ADHD and ASD), AEVI-002 anti-LIGHT in pediatric Crohn’s and the first glimpse of a new program (AEVI-005) borne from the relationship with Kyowa Hakko Kirin (KHK).  AEVI-005 also represents the initial fruits of a newly implemented (and supplemental) approach towards identifying high-potential therapeutic candidates.  Covered in more detail below, the highlights of each are;

• 001-ADHD ASCEND Trial:  Now recruiting. Timeline, including topline data expected ~mid-2018, unchanged. 

• 001-ASD/ADHD: Design of anticipated POC study updated to somewhat of a hybrid ASD and ADHD study and primary endpoint to ADHD-RS (from ASD measure). ASD measures for secondaries. High ASD/ADHD comorbidity may afford overall improvement with significance on ADHD measure. More straightforward ADHD-related regulatory pathway and Diagnostic Statistical Manual of Mental Disorders 5th edition (DSM-5) allows for combined diagnosis of ADHD and ASD. Could initiate small (n = 15-20) study in 2H 2018

• 002: anti-LIGHT severe pediatric Crohn’s study still has yet to commence enrollment. Three additional (in addition to primary CHOP IBD site) sites activated. Previously expected initial data by mid-2018, now pushed back to year-end. 

• 005: comes from option with existing KHK agreement. Specifics regarding the compound (‘first in-class monoclonal antibody’), target (‘specific cell-surface marker) and disease/condition (‘autoimmune ultra-orphan pediatric disease) have yet to be disclosed. In-vitro POC stage – if all goes well, could enter clinicals within 2 years

• Pipeline expansion?: GNMX indicated lots of recent external interest from potential partners/collaborators. Access to CHOP biobank appears to provide GNMX somewhat of gatekeeper positioning, attracting interest from external early-stage, orphan-oriented programs. Indications from the Q4 call was that this has afforded GNMX greater selectivity and growing lists of potential options in the context of pipeline expansion. We think this could be a harbinger of more high-potential programs   

Relative to the financials, Q4 and full-year 2017 net loss were $7.2M and $34.7M, compared to $8.5M and $41.9M in the comparable prior year periods.  EPS over the same periods was ($0.13) and ($0.83), compared to ($0.23) and ($1.19) in Q4 and FY2016.  

Cash used in operating activities was $8.3M and $33.3M ($6.4M and $31.2M, ex-changes in working capital) in the three and twelve months ending 12/31/17, compared to $7.5M and $32.8M ($7.8M and $34.8M) in the comparable prior year periods.  Cash balance at year-end was $33.7M, which GNMX expects to be sufficient to fund operations into early 2019.  

Several pipeline-related events could happen prior to then and possibly influence equity valuation and related pricing of (whatever form of) the next fundraising.  This could include ASCEND topline data (expected ~mid-2018), initiation of AEVI-001 in ASD/ADHD and topline results of 002 in severe pediatric onset Crohn’s (expected late-2018).  We also think there is high potential for additional pipeline-stocking during 2018, particularly given the recent burgeoning discussions with, and interest from, outside parties – which could also benefit GNMX’s share price.     

Relative to the operational update, both the AEVI-001 programs continue to evolve which includes some tweaks to trial design and, importantly, ASCEND is now recruiting patients with topline data still expected sometime around mid-year – which will be used to determine AEVI-001 development-related next-steps.  

Meanwhile, 002 updates remain relatively benign – although certainly not stagnant – the bad news is that the patient population has proven extremely difficult to recruit – the good news is that GNMX has remained resilient and recently added more resources in order to further help facilitate patient selection and enrollment.  

Certainly, one of the most exciting topics as it relates to the pipeline is the addition of new development programs.  005 is the latest and, facilitated by the recent ramp in external interest, GNMX could add one or more new programs before the end of 2018.

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 additional data from SAGA was released which demonstrated 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 full details. 

In May 2017 GNMX announced plans for a new phase II study (dubbed "ASCEND") which will enrich for this high-responder population – that is, a population with mutations to nine specific genes in the mGluR network (CNTN4 and eight 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 (6-12 vs 12-17 in SAGA) and incorporates two patient cohorts which will run through sequentially in each arm (this is a slight from prior expectations – explained below). Additional details;

• Multi-center (~20-25 sites) randomized (1:1), placebo-controlled

• Ages 6 – 17, ~75% of which are expected to be ages 6 – 12. This younger population should reduce placebo response as compared to SAGA

• Enrollment will be in sequential stages with the 9-gene cohort (N = ~32) enrolling first (“part A”) followed by those with no genetic mutation (N = ~41).  This current design is slightly modified from the initial ‘draft’ which included two distinct groups; 1) CNTN4+ patients and 2) the other 8 genes, whereas the current design, similar to SAGA, includes all 9 genes in one group   

• Treatment protocol (similar to SAGA): 4-week dose optimization (100-400mg bid), followed by 2-week dose maintenance

• Endpoints (similar to SAGA); primary: ADHD-RS-5, secondary: CGI-I 

While the initial drafted design of ASCEND may have provided greater enrichment, CNTN4+-only prevalence among the general ADHD population is only about 50% of that of those with mutations to the full 9-gene subset.  As we have noted in prior updates, clearly an important objective is to assess clinically significant response within a broader population (i.e. 9 genes) given that it represents a substantially 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 2017 and per comments on the Q4 call (mid-March 2018), management still hopes to have topline data around the middle of this year.      

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.  
  
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 including (and weighting towards) pediatric subjects (6 – 12 years) including that mGluR network mutations are more prevalent in the 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 pediatrics 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-only clinical trials given the typical greater 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 has referenced study data that indicated 65% - 85% of individuals with ASD also have ADHD.  Using the CHOP database, Aevi found that approximately 6% - 10% of ASD patients have the CNTN4+ mutation.  While GNMX had previously talked about potentially pursuing an ASD-primary endpoint study, that has since evolved to one with an ADHD-related primary endpoint given the latter may offer a potentially more straightforward regulatory pathway as well as recent update to DSM allowing for combined diagnosis of ADHD and ASD.  The current thinking is that if 001 can show improvement on ADHD symptoms, that that will be enough to demonstrate overall improvement.  While there could be further tweaks to the proposed design, current thoughts are:

• open label dose-ranging (100 - 400mg bid), multi-center 

• n = 15 - 20

• 6 - 17 years, 9-gene+ patients that are ADHD/ASD comorbid and with IQ of > 70 (rationale being that higher functioning = better chance of demonstrating treatment effect)  

• ADHD-RS primary endpoint (also primary in SAGA and ASCEND). Secondary endpoints will be established ASD measures.    

• timeline: specifics TBD with decisions post-ASCEND topline. Could initiate 2H 2018

AEVI-001 Subsequent Steps:  We do not think there will be any major decisions relative to next steps for AEVI-001 until at least read-out of ASCEND top-line data -possibly by mid-year, although we think it is not unlikely that that event may slip closer to current year-end.  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.  In terms of market considerations, the relatively very high unmet need in addressing the core symptoms of ASD may mean a particularly receptive market for a related indication.  We estimate that U.S. prevalence of ASD comorbid with ADHD and mGluR+ is approximately 75k – 125k children (slightly less if parsed for only IQ > 70) – which could represent an attractive orphan-opportunity – so that may also play into management’s decision-making.       

Anti-LIGHT Severe Pediatric Onset Crohn’s Phase 1/2 Signal Finding Study

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.  While GNMX previously noted that screening at the primary site (CHOP IBD center) commenced last June, no patients have yet to actually enroll.  But, with three additional now activated (Salt Lake City, Emory and Vanderbilt), management believes enrollment will begin and they will have topline data by the end of 2018 (changed from prior expectation of ‘mid-2018’). Importantly, no modifications to enrollment criteria appear to have been necessary - as a reminder, GNMX had previously indicated that they were 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 will use the topline data to decide whether to continue development (via their license with Kirin). 

‘AEVI-005’ and further pipeline expansion
GNMX exercised their option under their existing agreement with Kyowa Hakko Kirin (i.e. related to their anti-LIGHT candidate), licensing rights to ‘AEVI-005.  Citing competitive reasons, specifics regarding the compound (‘first in-class monoclonal antibody’), target (‘specific cell-surface marker) and disease/condition (‘autoimmune ultra-orphan pediatric disease as well as larger adult orphan diseases’) have yet to be disclosed.  Currently in preclinical development stage.

Pipeline expansion is likely to continue.  GNMX indicated lots of recent external interest from potential partners/collaborators. Access to CHOP biobank appears to provide GNMX somewhat of gatekeeper positioning, attracting interest from external early-stage, orphan-oriented programs. Indications from the Q4 call was that this has afforded GNMX greater selectivity and growing lists of potential options in the context of pipeline expansion.   

We cover GNMX with a $6/share price target. See below for free access to our updated report.

READ THE FULL RESEARCH REPORT HERE.

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