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AZRX: Capital Raise, OPTION 2 Trial Underway


By John Vandermosten, CFA


On July 20, 2020, AzurRx (NASDAQ: AZRX) announced the closing of $15.2 million in a private placement and repayment of $6.9 million in convertible notes. The proceeds in excess of the liability repayment will be used to advance the two Phase II clinical trials of MS1819 in patients with cystic fibrosis. The company issued 2,912 shares of Series B Convertible Preferred Stock at $7,700 per unit which will convert into 29.1 million shares of common stock. 5,000 warrants are attached to each convertible share, which is equivalent to 14.6 million warrants with an exercise price of $0.85 per share. In addition to the private placement, AzurRx entered into an exchange addendum repaying $6.9 million of principal on outstanding Senior Convertible Promissory Notes due September 2020 and issuance of warrants to purchase an aggregate of 1,772,972 shares of common stock with the same terms as the Series B warrants.

Two days after the financing, AzurRx provided an update regarding the initiation of Phase IIb trial (OPTION 2) of MS1819 in cystic fibrosis (CF). The first patient has been screened and three sites are now active. The trial will evaluate MS1819 in CF patients with exocrine pancreatic insufficiency (EPI) with topline results anticipated in 1Q:21. Through the results of this study, an optimal dose will be found in preparation for the pivotal Phase III study.

MS1819 will be evaluated against the current standard of care in EPI, porcine enzyme replacement therapy (PERT) and will be evaluated at two doses, 2.2g and 4.4g, with the primary endpoint of coefficient of fat absorption (CFA). The study will be an open-label, crossover study conducted in fifteen sites in the US and Poland. The sites will be sourced in partnership with the Cystic Fibrosis Institute which has access to numerous sites throughout the United States. AzurRx was granted permission again to utilize the network to support trials. The targeted enrollment for the trial is 30 CF patients, age 18 and older. MS1819 will be administered in enteric capsules, designed to retard digestion, allowing MS1819 passage through the stomach’s acidic environment and delivery in the duodenum. Patients will be randomized into two groups, one receiving either a 2.2g or 4.4g dose for three weeks and each compared to a PERT arm. After three weeks, stools will be collected for fat analysis. Patients will then be crossed over to an alternative treatment for another three weeks, again, followed by stool sampling and fat analysis. All patients will be followed for two weeks after completion.

Management has reported minimal clinical trial disruption due to the pandemic and expects complete enrollment and report of OPTION 2 topline results by 1Q:21. Topline is also expected to be reported for the CF combination trial with PERT in 1Q:21. The company stated that the trials have not been materially affected by the self-quarantine and efforts to minimize disruption to the trial’s progress will be aided by some remote management. All supplies, including enteric capsules are fully stocked for the trial underway. Trial progress in Hungary has resumed, and we look forward to announcements of first enrollments in Spain and Turkey.

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