By Brian Marckx, CFA
READ THE FULL APM RESEARCH REPORT
Aptorum Group Limited (APM) went public through an initial public offering which closed in December 2018 and raised $12.0M (gross) from the sale of 761k common shares. The shares were added to the Morgan Stanley Capital International (MSCI) Hong Kong Micro Cap Index in May 2019.
Aptorum is a Hong Kong based pre-revenue company focused on the development and eventual commercialization of a range of therapeutics in neurology, infectious diseases, gastroenterology, oncology and other disease areas. Product candidates are sourced and licensed through collaboration agreements with leading academic institutions. Their targeted focus largely rests on diseases and conditions which represent significant unmet global healthcare needs and/or those considered orphan diseases. Aptorum currently has exclusive licenses covering 12 distinct technologies, all of which are in preclinical stages. Among these are their three lead programs which includes;
• ALS-1, a small molecule drug candidate being developed for the treatment of influenza A virus by acting on a novel target, viral nucleoproteins (NP), which have been shown to be essential in proliferation of the virus. Evidence to-date shows ALS-1 triggers the aggregation of NP, thereby preventing their entry into the nucleus and inhibiting replication. Moreover, in vitro studies have also shown that ALS-1 may have utility across a broad range of NP variants. As NP represents a novel target, it is hypothesized that ALS-1, if successfully developed, would not be susceptible to acquired resistance as are currently available influenza A treatments, such as Roche’s (RHHBY) Tamiflu, the most widely prescribed treatment for the virus. The potential target market for ALS-1 is represented by the three to five million cases of severe influenza that occur worldwide each year, which result in between 290k and 650k deaths. Driven in part by anticipated demand for novel therapies, industry experts forecast the global market for influenza drugs to double, from $600M in 2016 to $1.2B by 2025.
• ALS-4, a small molecule drug candidate being developed for the treatment of bacterial infections caused by Staphylococcus aureus including Methicillin-resistant Staphylococcus aureus (MRSA). ALS-4 represents the world’s first application of chemical genetics to address MRSA infection. ALS-4 targets an enzyme that shields Staphylococcus aureus, including MRSA, from the immune system, a novel approach to addressing bacterial infections and one that could mitigate the significant and growing threat of antibiotic-resistant bacteria. Preclinical findings were published in mBio in 2017 and were the subject of the 1st Prize of the Innovation Academy Award at the 4th International Conference on Prevention & Infection Control that same year. If successfully developed, ALS-4 could complement or even replace currently available antibiotics, the effectiveness of which continues to wane as bacteria becomes more and more resistant. ALS-4 may be eligible to leverage FDA’s new LPAD pathway which is designed to speed approval of novel antibacterial drugs. The potential U.S. market for ALS-4 is represented by the ~126k hospitalizations and 94k invasive infections associated with MRSA each year. Globally, approximately $3B is spent each year on MRSA-related drugs.
• NLS-1, a small molecule drug candidate being developed as a novel treatment for endometriosis, a condition whereby tissue that lines the uterus abnormally grows on the outside of it and for which there is no effective cure. In vitro and animal models have indicated that NLS-1, a molecule extracted from green tea, may inhibit angiogenesis of endometriosis-related lesions and result in a significant reduction in the size and number of lesions. Moreover, safety appears acceptable. The potential market for NLS-1 is represented by the approximate 176M women globally, including seven million in the U.S., that suffer from endometriosis.
Assuming continued success in preclinical development, Aptorum believes that they may be in a position to file for an Investigational New Drug Application seeking regulatory approval to commence clinical studies for one or more of these candidates by 2020 or 2021. In addition to the U.S., the company has indicated that their strategy may also potentially include pursuit of clinical studies in China as well as in Europe.
In addition to these three lead candidates, Aptorum has several other, mostly earlier-stage, therapeutic programs underway that similarly focus on unmet clinical needs. These include a next-generation small molecule targeting Staphylococcus aureus (including MRSA), programs related to both the diagnosis/imaging and treatment of Alzheimer’s disease, an extract from Chinese Yam targeting menopausal symptoms and a derivative from Ephedra paychyclada for the treatment of liver cancer, among others.
The company also has a non-therapeutics segment which encompasses;
• Development of surgical robotics and medical devices, which is operated through their Signate Life Sciences Limited subsidiary. The initial project, named SLS-1, is a robotic catheter platform for intraoperative MRI-guided cardiac catheterization. Given the potential for a less rigorous regulatory pathway with medical devices (as compared to drugs and biologics), the time-to-market for SLS-1, if successfully developed, could be faster than the company’s therapeutic candidates
• An outpatient clinic, which is operated through their Aptorum Medical Limited (AML) subsidiary. The clinic’s initial focus is the treatment of chronic diseases associated with sedentary lifestyles. Aptorum expects that their AML Clinic, which began operations as ‘Talem Medical’ in June 2018, to reach operating profitability within 18 months of operating at full capacity. AML sales, however, are not expected to be sufficient enough to fully fund the company’s other projects
While the company’s main focus is on developing their three lead candidates, they also plan to dedicate some time and resources towards their earlier-stage therapeutic projects as well as in developing SLS-1 and the AML Clinic. Aptorum may also seek new licensing and development opportunities that fit within the scope of their selection criteria, namely candidates that address unmet medical needs such as orphan diseases. This strategy should provide some level of risk diversification and at the same time, increase the chances of ultimate success of one more projects. The company will also seek grants from the Hong Kong government, which has the potential to provide significant and non-dilutive funding.
The company further diversified their shots on goal with three significant announcements in Q2 2019;
- in April they announced an agreement with Aeneas Capital Limited and A*ccelerate Technologies Pte Ltd., to co-fund healthcare and technology start-ups in Singapore over the next five years. The companies anticipate investing $90M to create up to 20 new healthcare-focused ventures.
- also in April they announced the establishment of Smart Pharma, a new subsidiary. Smart Pharma (SmartP) will operate “Smart-ACT”, which Aptorum notes is its “its novel computational repurposed drug discovery, modeling and validation platform.” Smart-ACT is an acronym for Accelerated Commercialization of Therapeutics and, per the April press release, “encompasses state-of-the-art technology in systematic screening of existing approved drug molecules against selected therapeutic targets.” APM anticipates that the subsidiary will initially focus on the evaluation of molecules for orphan and other under-served disease. The aim is to identify up to 10 repurposed drug candidates (the development of which can often be relatively accelerated given already well-established safety profiles) per year. Concurrent with the announced establishment of Smart Pharma, APM reported the launch of ‘Smart Pharma token’ (SMPT). SMPT, a token backed by the IP and future proceeds from the licensing/sale of drugs created through the Smart-ACT program, was jointly developed with blockchain company, Aenco.
- in May Aptorum announced the establishment of Claves Life Sciences Limited, a subsidiary focused on the role of gut microbiota on major diseases such as metabolic diseases, cardiovascular disease, cancer, neurodegenerative diseases and others.
The intellectual property underlying Aptorum’s pipeline assets includes 12 U.S. patents and five pending U.S. non-provisional patent applications for which they are the exclusive licensee. Aptorum also owns two U.S. provisional patent applications. Moreover, they are also the exclusive licensee of several international patents and patent applications.
Innovation, product development, pipeline expansion and, eventually, clinical trials are facilitated through close collaborative ties with several leading academic institutions and clinical research organizations. Among these are the University of Hong Kong and the Chinese University of Hong Kong, both of which are accredited by the China Food and Drug Administration (CFDA) to conduct clinical trials – which potentially further facilitates eventual regulatory approval in the world’s most populous country.
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