EDSA: EB05 Inhibits Inflammation Initiated by Multiple Pathogens In Vitro…
NASDAQ:EDSA
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Business Update
In Vitro Study Shows EB05 Effective Against Multiple Pathogens
In June 2023, Edesa Biotech, Inc. (NASDAQ:EDSA) announced positive results from an in vitro study investigating EB05 (paridiprubart) against a panel of respiratory pathogens (Malty et al., 2023). EB05 is an inhibitor of Toll-like receptor 4 (TLR4) signaling through dimer inhibition, which is an important mediator of inflammation caused by a variety of pathogen-associated molecular patterns (PAMPs) and host-derived damage-associated molecular patterns (DAMPs). The current study demonstrated that EB05 inhibits the response to TLR4 agonists including lipopolysaccharide (LPS), the SARS-CoV-2 spike protein, the DAMP high mobility group box 1 (HMGB1), along with the NF-κB response to infection by both viral and bacterial pathogens. Importantly, in a model of active infection, EB05 suppressed the NF-κB-dependent response that is activated by infection with SARS-CoV-2, coronavirus 229E, influenza A, or Haemophilus influenzae, a Gram-negative bacterial pathogen.
The results from this study support testing EB05 as a general therapy for acute respiratory distress syndrome caused by multiple different types of pathogens. In addition to the pathogens tested in the current study, TLR4 is known to be activated by glycoproteins from the Ebola virus, dengue virus, and respiratory syncytial virus (RSV).
EB05 is currently being investigated as a therapy for hospitalized patients with acute respiratory distress syndrome (ARDS) due to SARS-CoV-2 infection. Approximately 600 patients will be enrolled with a primary endpoint of mortality rate at 28 days. Key secondary endpoints include ventilator free data at 28 days and mortality rate at 60 days. Clinical sites are open and enrolling patients in the U.S. and Canada. Subject to funding, Edesa plans to increase the number of investigational centers from 23 up to 60.
In September 2022, Edesa announced final results from the Phase 2 portion of its ongoing Phase 2/3 clinical trial of EB05. At the 28-day timepoint, patients treated with EB05 in addition to standard of care (SOC) had a mortality rate of 7.7% compared to 40% for patients treated with placebo and SOC (P=0.04). Using the Cox’s Proportional Hazard Model, this survival benefit translated to an 84.0% reduction in the risk of dying for patients treated with EB05 plus SOC compared to placebo plus SOC at 28 days. Additional efficacy signals were observed in the proportion of patients who were alive and without the need for oxygen support at Day 28 in severe COVID-19 patients at WCSS level ≥5 (99% of patients had ARDS at baseline) along with the proportion of patients who achieved at least a 2-point improvement on the WCSS.
Financial Update
On August 9, 2022, Edesa announced financial results for the third quarter of fiscal year 2023 that ended June 30, 2023. There were no revenues reported for the third quarter of fiscal year 2023. R&D expenses in the third quarter of fiscal year 2023 were $1.0 million, compared to $4.6 million for the third quarter of fiscal year 2022. The decrease was primarily due to decreases in costs associated with ongoing clinical studies and manufacturing of investigational drugs. G&A expenses totaled $1.0 million for the third quarter of fiscal year 2023 compared to $1.3 million for the third quarter of fiscal year 2022. The decrease was primarily due to a decrease in non-cash, stock-based compensation.
As of June 30, 2023, Edesa had approximately $6.5 million in cash and cash equivalents. Subsequent to the end of the third quarter of fiscal year 2023, Edesa raised gross proceeds of approximately $0.2 million under the company’s at-the-market offering program. We estimate that the company has sufficient capital to fund operations for the next 12 months. As of August 9, 2023, Edesa had approximately 21.1 million shares outstanding and when factoring in stock options and warrants a fully diluted share count of approximately 29.2 million.
Conclusion
The in vitro results for EB05 and its ability to dampen the immune response generated by infections with multiple different viral and bacterial pathogens is very encouraging, particularly since the company is planning to expand the opportunity for EB05 as a general therapy for ARDS. In addition, Edesa will be looking to initiate a Phase 2 clinical trial in vitiligo as well as completing regulatory filings for a Phase 2 study of paridiprubart in systemic sclerosis. Lastly, the company is preparing a final clinical study report for regulators based on the Phase 2b results for EB01 in allergic contact dermatitis. With no changes to our model our valuation remains at $6 per share.
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