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PMN.TO: Untangling the Beta-Amyloid Oligomers

By John Vandermosten, CFA




Initiating Coverage

We are initiating coverage of ProMIS Neurosciences Inc. (TSE:PMN.TO) (OTC:ARFXF) with a CAD$7.00 price target based on our forecast for product sales after a 2027 launch of its lead candidate PMN310 in the United States, EU and rest of world. The company is developing a monoclonal antibody (mAb) that targets epitopes specific to toxic oligomers implicated in the development of Alzheimer’s Disease (AD). The company’s lead candidate is currently in pre-clinical development and is expected to begin Phase I trials in 2019. In recent years there have been numerous failures in the AD space and no drug or biologic has ever been approved as a cure for the disease. Despite the poor success rate, much has been learned in the last decades from unsuccessful trials and adjacent research work. Efforts have narrowed down the target to amyloid-beta (Aβ), which comes in several forms. Consensus has built in recent years directing the focus towards toxic oligomers as the cause of AD, which are small clumps of monomers that accumulate in the brain and kill neurons. ProMIS’ PMN310 is able to exclusively target this form of Aβ and is built on a peptide backbone that avoids common side effects.

ProMIS’ targeted monoclonal antibodies are built on two proprietary discovery platforms called ProMIS and Collective Coordinates. These algorithms employ protein thermodynamics to predict disease specific epitopes on the surface of misfolded proteins. These computational discovery platforms can be used to address a variety of neurodegenerative diseases including AD, amyotrophic lateral sclerosis (ALS), Parkinson’s Disease (PD) and others. The company’s current focus is on PMN310, one of a family of mAbs that targets toxic Aβ oligomers.

Based on our forecasts which include Phase I, II and III clinical trials and a review period for regulatory agencies, we anticipate a launch of PMN310 in 2027, although there may be opportunities for expedited development. The field of AD drug development programs has thinned over time leaving only a few left standing. We believe that much has been learned from these failures and that ProMIS is targeting the underlying cause of AD with its PMN310 candidate. While success is not guaranteed, we are optimistic on the biologic’s chances and adjust our valuation to reflect historical success probabilities. Given the immense market that can be tapped with a successful candidate in the AD space, we anticipate that ProMIS will partner with a global pharmaceutical company during or after Phase II results and will also require a global partner to commercialize the drug. There are few competitors with convincing AD therapies in development which should provide a strong negotiating position for the company. In addition to a portfolio of candidates for neurodegenerative diseases, ProMIS has a unique platform that is able to identify unique epitopes on misfolded proteins that is applicable to a broad spectrum of neurodegenerative and other conditions such as ALS and Parkinson’s Disease. We initiate on the shares of ProMIS with a target price of CAD$7.00.

Investment Thesis

ProMIS has the benefit of access to a long history of research and competitor failures to direct its focus on what works. Combining discoveries from those who have come before with a proprietary algorithm that is able to predict the therapeutic targets in neurodegenerative diseases places ProMIS in an advantageous position to construct a precise molecule that can address the underlying cause. Regrettably, the failure rate has been high for AD drugs, and it appears that in the last few quarters, the rate has only accelerated with Merck’s verubecestat, vTv’s azeliragon and Lilly’s lanabecestat among others announcing Phase III disappointments so far this year. Despite setbacks for trials that were initiated years ago, research and diagnostics have advanced to a point where the proper target has become more clear. Scientists’ work has also found ways to avoid negative side effects observed in earlier trials, and we are now in a position to have a higher degree of confidence of both the target and the safety and efficacy of the drug.

The FDA has recognized the poor success rate for AD drugs and is making a change to its guidance for endpoints recommended to obtain regulatory approval. In the past, improvement in both cognitive and functional criteria were required; however, the agency now believes that a single endpoint is sufficient. They also have recognized the importance of biomarkers for identifying improvement for early stage AD patients.

Key reasons to own ProMIS’ shares:

‣ Pursuing Large End Market
     ◦ Near 6 Million with AD in US
     ◦ Over 30 Million with AD Worldwide
     ◦ Larger Addressible Market for Earlier Stage Disease
     ◦ Number Afflicted Expected to Triple by 2050
‣ No Approved Therapies and Few in Development
‣ New FDA Guidance Supportive of Approval
     ◦ Single Endpoint Sufficient
     ◦ Surrogate Endpoints Allowed
     ◦ Expedited Approval Possible
‣ Candidates Can Uniquely Bind to Toxic AβO
‣ Able to Develop Candidates for Other Neurodegenerative Diseases
     ◦ ALS and Parkinson’s Disease
‣ Strong IP Protection Around Target Acquisition and mAb Epitopes

In support of our thesis, we provide a review of AD, its symptoms, diagnosis and current treatment. There have been many Aβ focused monoclonal antibodies in advanced trials that failed to achieve success. We believe that one of the reasons previous drugs have failed is that the clinical programs have ignored the large body of evidence pointing to toxic low molecular weight Aβ oligomers as the source of neuron death. However, much has been learned since these trials were initiated and the pathway cleared by the current frontrunner, Biogen’s aducanumab, is a vanguard for PMN310 to follow. In recognition of the importance of the disease and the high rate of failure, the FDA has evolved its stance on trial design which we review in depth.

Alzheimer’s Disease

Alzheimer’s Disease is a neurodegenerative condition which affects 5.7 million Americans and over 30 million people worldwide. Due to the faster growth of the older population and the higher prevalence of Alzheimer’s in those over 65, these numbers are expected to almost double and triple by 2030 and 2050 respectively. AD is also distinguished in that it is the only major disease where deaths have increased over the last decades. Between 2000 and 2013, a report from the Alzheimer’s Association found that deaths resulting from stroke, heart disease, and prostate cancer decreased 23%, 14%, and 11%, respectively, while Alzheimer's deaths increased 71%.

AD is named after Alois Alzheimer who made the first clinical observations of a woman with the disease between the years of 1901 to 1906. He noted that the 50-year old experienced memory loss, paranoia and psychological changes. After the patient’s death, an autopsy was performed which found shrinkage in and around nerve cells and abnormal deposits that were later identified as Aβ plaques and neurofibrillary tangles.

According to the CDC AD is the 6th leading cause of death in the United States, after stroke and before diabetes. While there are almost 6 million individuals in the US diagnosed with AD, there are many more who are in earlier stages of the disease called mild cognitive impairment (MCI). MCI is seen as a precursor to AD and is measurable by a change in thinking abilities. A person with MCI can carry on normal everyday tasks, but does show some signs of impairment in sensitive testing.

View Exhibit I

Soluble Toxic Aβ Oligomers

There is a large body of research showing that the presence of amyloid beta oligomers (AβOs) is associated with memory impairment and cognitive deficits (see our initiation for citations). Other research has emerged debunking the relationship between monomers and plaques and AD. This refinement of the amyloid hypothesis has enabled researchers to focus more precisely on the elements that are responsible for AD. AβOs have been implicated in impaired synaptic plasticity, loss of memory function, synapse elimination and nerve cell death. During the earlier days of AD research, the focus was predominantly on senile plaques due to their prevalence in AD brains. However, researchers began to notice that plaque burden was not associated with the intensity of the disease and that neuronal death occurred in brain regions with no plaques. Later research showed that plaques were also present in healthy brains. This realization combined with research narrowing the focus to oligomers has prompted alert scientists to target their efforts towards AβOs. Early data from the aducanumab trial is supportive of this as the drug binds to AβOs and fibrillary amyloid β, but not Aβ monomers. The study has provided evidence of slowing cognitive deterioration.

Published data supports an inverse correlation between the size of the AβO aggregates and their toxicity. For some time researchers found little correlation between the presence of Aβ aggregates and neuronal damage. This realization shifted the focus of research down the size scale to small soluble oligomers of Aβs. Subsequent work suggested that the degree of toxicity of the AβOs were dependent on the size, aggregation state and diffusion of the complex. Tests provided evidence that neurotoxic activity increased for dimers, trimers and tetramers relative to monomers and fibrils. Research found that the relative rarity of higher order oligomers made it difficult to determine their toxicity; however, due to their low incidence, they may not be a worthwhile target. We include an exhibit below which reconciles the findings of this research illustrating a fluctuating level of toxicity as the size of aggregates increases. Overall, the trend from trimers and tetramers to 24 to 34-mers to fibrils is generally one of lower toxicity, demonstrating less harm as structure size increases.

In Development

The last several years have been distinguished by the high number of failures announced for development stage Alzheimer’s treatments. As of early 2017, there were 105 agents in phased trials for AD. This includes recent defeats which seem to have accelerated in the first half of 2018. In the year to date we have seen disappointments from Eli Lilly’s solanezumab and lanabecestat, Merck’s verubecestat, vTv’s azeliragon and the closure of Pfizer’s neuroscience division. Looking back a little further, we show the unsuccessful trials in the pursuit of an AD cure over the 1998 to 2014 period below.

View Exhibit II

While the failures have been disappointing, the results have led to greater understanding of the structure of an effective drug and the trial design necessary to support statistical significance. One candidate which has displayed efficacy in early stage trials and also targets toxic oligomers is Biogen’s aducanumab. While it is not uniquely specific to the low molecular weight oligomers that appear to be the cause of neurotoxicity, it does bind to them.

Company Strategy

ProMIS’ strategy is to focus on being best-in-class rather than first-in-class. Looking back, the three largest products in pharma (Lipitor, Humira and Sovaldi/Harvoni) were not the first drugs in their indication, but were rather follow-on products that addressed the weaknesses in predecessors and went on to dominate the class afterwards. The scientists that were responsible for them examined previous compounds to understand how they could be made better, and applied their knowledge to the design of an improved compound. ProMIS has applied this same approach to AD reviewing solanezumab, verubecustat and aducanumab among others. Their process implements this approach through rational drug design and in silico models to identify new products that focus on what works and eliminate what does not.

View Exhibit III

For AD, the company is pursuing a very specific profile for its candidate:

‣ No monomer binding
     ◦ Monomers are substantially more prolific than oligomers (1,000:1)
     ◦ Monomer binding draws drug away from desired target
‣ No plaque binding
     ◦ Plaque binding draws drug away from desired target
     ◦ Plaques may be protective, as they sequester oligomers
     ◦ Plaque binding contributes to ARIA-E
‣ Highly selective toxic oligomer binding
     ◦ Targets cause of neuronal death
     ◦ Requires high selectivity
     ◦ Must identify the specific epitope
‣ Personalized medicine with companion diagnostic
     ◦ Identify specific oligomer strains
     ◦ Blood based screening assay
     ◦ Address non-responders


Alzheimer’s Disease is frightening condition that takes away an individual’s ability to remember, organize logical thought, control emotions and in its last stages even regulate the body’s basic functions such as breathing and heartbeat. Not only does it cause terrible harm to the person it afflicts, but it also creates a tremendous burden on immediate family and the health care system. It is the only major disease where the death rate has increased over recent decades and where no disease modifying therapy has been successful. In recent years, many drugs in advanced stages failed to show sufficient evidence of efficacy, which has frightened investment away and led to reallocation of resources elsewhere. However, much research has been conducted that shows these advanced programs have focused on the wrong target. Looking back decades, there is evidence supporting the neurotoxicity of soluble toxic Aβ oligomers. While most programs under the amyloid hypothesis have been targeting monomers and fibrils, one program in particular has also included oligomers. This is Biogen’s aducanumab, which we think will be approved after topline is reported in 2020. If approved, this will validate the toxic oligomer target and bring attention to PMN310 and ProMIS as well as attract substantial interest from big pharma who recognize the gaping hole in their therapeutic portfolio.

ProMIS has been able to develop a molecule to address AD that improves upon the failures that have come before. Using its own proprietary discovery platforms it has developed precise solutions for solving neurodegenerative diseases. The company has used this specialized platform to develop PMN310, which is able to specifically target toxic oligomers and exclude other forms of Aβ that are either inert or neuroprotective. This in silico approach is expected to have other applications beyond AD in Parkinson’s and ALS. Combined with regulatory changes that have simplified and clarified the pathway to approval, we see a possibility that PMN310 may receive expedited treatment if efficacy and safety are supported in Phase II trials.

ProMIS is on track for an IND filing in 1H:19 and a Phase I trial in 2H:19. We see the clinical trial pathway forward as clear given the other programs that have preceded PMN310, additional guidance from the FDA and various diverse stakeholders all aligned in their desire to find a safe and effective treatment for AD. The guidance and effort from the FDA is particularly important as it highlights biomarkers for earlier stage disease as valid endpoints. This should help reduce clinical trial duration and raise the prospect for expedited approval.

We believe ProMIS represents an attractive opportunity to gain exposure to an immense disease area with no other approved therapies. There are almost six million persons with AD in the US and over 30 million outside of the US that suffer from the disease. Additionally, there is a larger population with MCI and pre-Alzheimer’s which may benefit even more from toxic oligomer sequestering therapy. The path forward is relatively clear with other assets including aducanumab setting the precedent for trial design. We initiate ProMIS Neurosciences with a valuation of CAD$7.00.

Please see our initiation for additional discussion and citations.

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