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ALQGC: Initiating Coverage on Quantum Genomics


By John Vandermosten, CFA



We are initiating coverage of Quantum Genomics, (EPA:ALQGC) (OTCQX:QNNTF) at a valuation of €13 per share. Our valuation is based on our estimates for a successful commercialization of firibastat in difficult-to-treat and resistant hypertension and heart failure patients. Firibastat is a Brain Aminopeptidase A Inhibitor (BAPAI) that blocks the metabolization of angiotensin II (A2) into angiotensin III (A3) thereby normalizing blood pressure and supporting heart function.

Control of resistant hypertension is Quantum’s lead indication and addresses one of the most common conditions around the globe. Hypertension has increased in prevalence as diets have changed, physical activity has decreased and unhealthy habits such as drinking and smoking persist. The World Health Organization estimates that there are 1.13 billion people worldwide with HTN, making it one of the most common conditions in the population, costing an estimated $370 billion worldwide. While there are many products approved to treat the condition, about half of the hypertensive population is unable to keep it under control, even with three or more medications, demonstrating a significant unmet need for an important public health challenge. Quantum’s secondary indication is post myocardial infarction heart failure which describes a complex syndrome, characterized by impaired ability for the heart to pump blood. Our estimates place global prevalence of post-myocardial infarction (MI) heart failure HF at around 50 million people this year which could cost the world over $580 billion per year.

Firibastat works within the renin-angiotensin-aldosterone system (RAAS). The RAAS regulates blood pressure, fluid and electrolyte balance and systemic vascular resistance and is the system in which angiotensin converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs) act. Specifically, Brain Aminopeptidase A Inhibitors target not the peripheral but brain-level (central) RAAS that plays a unique role in regulating blood pressure. Brain-level RAAS was already known to modulate systemic tone, but, until now, a formulation allowing BAPAI to cross into the brain had not existed. Brain-level RAAS is of special interest, as, unlike peripheral RAAS, central RAAS also has neural relevance to systemic tone, making it a critical target for difficult-to-treat, resistant or salt-sensitive hypertension and post-MI HF. Firibastat is a prodrug, comprised of two EC33 moieties dimerized via disulfide bond. The prodrug crosses the blood brain barrier more readily than EC33, where it is then cleaved and activated by brain-level reductases.

Quantum’s firibastat has a triple mechanism of action which may address high blood pressure in resistant populations. The action of the drug prevents the aminopeptidase A enzyme from converting A2 into A3. A3 will normally bind to angiotensin receptor type 1 (AT1), which raises blood pressure. Without A3, vasopressin release is reduced, sympathetic nerve activity declines and baroreflex action increases. Additionally, A2 is converted to angiotensin-(1-7) rather than A3, which has anti-hypertensive effects. Because hypertension and HF are related, many drugs used to treat hypertension are implemented in the management of post-MI HF. Brain-level RAAS has been implicated in post-MI cardiac remodeling; thus, firibastat can potentially go beyond current therapies to alter the course of post-MI HF.

Quantum Development Pipeline

Quantum’s lead indication is difficult-to-treat and resistant hypertension. Clinical trials in support of this indication employ both once-a-day (tablet) and twice-a-day (capsule and tablet) formulations. After successful Phase I and II (NEW-HOPE) trials, and positive feedback from the FDA regarding Phase III trial design, Quantum partnered with Brazilian pharmaceutical firm Biolab Sanus Pharmaceuticals in a milestone and revenue royalty deal to evaluate and commercialize twice-daily firibastat in Phase III studies (FRESH). Quantum also has planned another Phase III study of firibastat in difficult-to-treat and resistant hypertensive patients (RE-FRESH), expected to commence in 1Q:21, design for which is still underway. The once-a-day formulation has been investigated in Phase I. In post-MI HF, firibastat is currently in A Phase IIb trial (QUORUM) which is evaluating its effects on left ventricular ejection fraction post-MI in comparison to ramipril. End of recruitment is expected 2H:20. Success in both in hypertension and heart failure trials would elevate Quantum’s firibastat to an immense patient population in need of innovative therapies.

Key reasons to own Quantum Genomics shares:

‣ First in class, Phase III asset to address an unmet need in difficult-to-treat and resistant hypertension

‣ First in class, Phase II asset to address post-MI HF

‣ Sizeable target patient populations with no innovative competitors

‣ Patent protection and global licensing of BAPAI technology

‣ Strong pre-clinical evidence in vivo

‣ Healthy cash position, runway for approximately one year

◦ Closed €8 million and access to additional €16 million financing from Negma

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