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EDSA: Secures CAD$14 Million for COVID-19 Trial of EB05…

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By David Bautz, PhD



Business Update

CAD$14 Million for COVID-19 Study

On February 2, 2021, Edesa Biotech, Inc. (NASDAQ:EDSA) announced that the Government of Canada has committed up to CAD$14 million (US$11 million) in nonrepayable funding to complete the Phase 2 portion of the ongoing Phase 2/3 clinical trial of EB05 in patients hospitalized with acute respiratory distress syndrome (ARDS) caused by COVID-19. The first patient was enrolled into the trial in November 2020 and we anticipate the first interim analysis being conducted in the near future.

The trial is a randomized, multicenter, double blind, placebo-controlled study that is expected to enroll approximately 316 patients across 40 hospitals (NCT04401475). It will evaluate the safety and efficacy of EB05 in adult hospitalized patients with moderate to severe COVID-19 that could eventually progress to acute lung injury (ALI) and acute respiratory distress syndrome (ARDS), both of which are life threatening and require intensive medical care. Patients will receive a single dose of either EB05 (15 mg/kg) + standard of care (SOC) or SOC only. If the results look promising the protocol allows for continuation of enrollment as a pivotal Phase 3 trial.

The CAD$14 million will be utilized to not only fund the remainder of the Phase 2 portion of the study but also to perform preclinical research on whether EB05 is effective in other areas, including as a treatment for other respiratory pathogens.

Background on TLR4 and ARDS

EB05 is a monoclonal antibody that targets toll-like receptor 4 (TLR4). Toll-like receptors (TLRs) belong to the pattern recognition receptor family of proteins and are an important part of the innate immune system. They are responsible for detecting invading pathogens and initiating an immediate immune response. TLR4 recognizes a number of different pathogens, including bacterial lipopolysaccharide (LPS) (Miller et al., 2005), mannuronic acid polymers from Gram-negative bacteria (Flo et al., 2002), and viral components (Haynes et al., 2001). Its activation leads to production of pro-inflammatory cytokines and chemokines (Janssens et al., 2003).

In addition to being involved in the innate immune response to pathogens, TLRs are known to be involved in exaggerated immune responses, with TLR4 shown to induce inflammatory responses that can lead to ALI (Jiang et al., 2005). Additional examples for TLR4’s role in ALI and ARDS include:

Imai et al., 2008: This study looked at the role of TLR4 in ALI. Mice deficient in TLR4 (Tlr4-/-) were resistant to acid-induced ALI and while H5N1 influenza rapidly induced ALI in wild-type mice, TLR4 deficient mice were resistant to H5N1-induced ALI, suggesting a causative role for TLR4 in ALI.

Shirey et al., 2016: This research group had previously reported that Tlr4-/- mice are resistant to influenza-induced lethality and a novel small molecule TLR4 inhibitor (eritoran) reduced influenza-induced lethality. In this study, an anti-TLR4 antibody protected mice from lethal influenza infection.

Perrin-Cocon et al., 2017: A novel small molecule TLR4 antagonist (FP7) was tested in an in vivo mouse model of influenza. FP7 blocked TLR4 stimulation and protected mice from influenza-induced lethality and reduced inflammatory cytokine expression and ALI.

Zhou et al., 2018: An anti-TLR4 monoclonal antibody was studied in a rat model of ARDS. The rats treated with the anti-TLR4 antibody showed lower respiratory frequency, lung permeability, lung edema, inflammatory infiltration, and tumor necrosis factor (TNF)-α and interleukin (IL)-1β expression levels in lungs along with lower TLR4, TLR9, MyD88, and nuclear factor (NF)-ϰB expression in macrophages.

Domitrovic 2018: TLR4 monoclonal antibodies were evaluated both in vitro and in a rat model of ARDS. Stimulating macrophages with TNF-α along with anti-TLR4 antibody eliminated the upregulation and secretion of cytokines. Pre-treating rats with anti-TLR4 antibody prior to ventilation decreased lung injury, inflammatory infiltration, lung edema, and TLR4, TLR9, MyD88, and NF-ϰB expression.

Zhang et al., 2019: This study examined the role of TLR4 and NF-ϰB in ALI and found inhibition of the TLR4/NF-ϰB signaling pathway decreased oxidative stress and improved ALI.

A number of studies have been published this year showing how TLR4 signaling is involved in COVID-19, including data showing that the level of TLR4 ligands (specifically calprotectin) can differentiate patients with severe COVID-19 compared to mild cases. Calprotectin, otherwise known as S100A8/A9, is a TLR4 ligand that promotes NF-ϰB activation (Riva et al., 2012) and the secretion of multiple inflammatory proteins such as IL-6 (Wang et al., 2018). Taken together, these studies provide the rationale for testing TLR4 signaling inhibition as a treatment for COVID-19.

Silvin et al., 2020: This study examined peripheral blood cells in patients suffering from COVID-19 and included 27 with mild disease, 16 with moderate disease, and 43 with severe disease. The results showed that high levels of calprotectin correlated with severe COVID-19. The authors propose that calprotectin may trigger the cytokine release syndrome seen in severe COVID-19.

Shi et al., 2020: This retrospective study examined the level of calprotectin in 172 COVID-19 patients and showed that all of the patients had elevated levels of calprotectin compared to healthy controls. In addition, when examined on day 1 or 2 of hospitalization (n=94 patients), calprotectin levels were significantly higher in patients who would go on to require mechanical ventilation (n=32) compared to those who were not intubated (P<0.0001).

Chen et al., 2020: This was a prospective study of 121 COVID-19 patients with 40 in the ICU and 81 in general wards at enrollment. Results showed that higher calprotectin resulted in significantly worse overall survival (P<0.0001). In addition, the level of calprotectin correlated with a range of inflammatory cytokines and chemokines, with three myeloid chemokines (IL-8, MCP-3, MCP-1) being the most significantly correlated and representing a distinct cytokine storm signature in COVID-19 patients.

Acquisition of OncoImmune Shows Potential for COVID-19 Therapeutics

In November 2020, Merck (MRK) announced the acquisition of OncoImmune, a privately held, clinical stage biopharmaceutical company for $425 million in cash along with the potential for OncoImmune shareholders to receive sales-based and milestone-based payments.

OncoImmune recently announced positive results from a Phase 3 study of CD24Fc for the treatment of patients with severe and critical COVID-19 (NCT04317040). This was a randomized, double blind, placebo controlled trial in which hospitalized COVID-19 patients who required oxygen support (including supplemental oxygen, high flow oxygen, and non-invasive ventilation) were assigned to receive either standard of care (SOC) plus a single dose of CD24Fc (SACCOVID™) or SOC plus placebo. The trial had planned to enroll 270 patients, however the trial was stopped after an interim efficacy analysis was performed when 146 patients had achieved clinical recovery from COVID-19, which occurred after enrollment of 203 patients. Patients who received CD24Fc had a 60% better chance of clinical recovery than those on placebo (P=0.005) and the risk of death from respiratory failure was reduced by more than 50%.

CD24Fc is a fusion protein consisting of CD24 and an immunoglobulin Fc domain. CD24 is a small glycosylated protein that was originally discovered by its ability to provide costimulatory signals to T cells (Liu et al., 1992). It binds to Siglec-10 and acts as an innate immune checkpoint against danger-associated molecular patterns (DAMPs), which are intracellular proteins that are released during cellular injury, through their binding to either CD24 or TLR (Kono et al., 2008). The innate immune system is also activated by pathogen-associated molecular patterns (PAMPs), which are mostly recognized by TLRs. The following figure shows how CD24 (and TLRs) sit at the apex of the inflammatory signaling pathway that is initiated by PAMPs and DAMPs (Liu et al., 2009).

While simplified, the figure above shows that binding of TLR by their ligands (PAMPs or DAMPs) initiates an inflammatory cytokine signaling pathway and that CD24 binding of DAMPs works to inhibit the DAMP-induced signal. In COVID-19, the death of pneumocytes, and consequently the release of DAMPs, is a prominent feature and can ultimately lead to the development of ARDS. It is thought that CD24Fc both binds to DAMPs to prevent their interaction with TLRs as well as binding to Siglec-10 to inhibit inflammatory signaling through the DAMP/TRL pathway. Just like CD24Fc, EB05 is designed to inhibit the interaction of DAMPs with TLR so that the inflammatory signaling cascade is not initiated. Since CD24Fc appears to have a positive effect on COVID-19 pathogenicity (based on the results released by OncoImmune), it stands to reason that a similar intervention in the TLR pathway could also lead to positive results in COVID-19 patients.

Update on Phase 2b Trial of EB01

Edesa is currently conducting a Phase 2b clinical trial of EB01 2.0% cream in patients with (allergic contact dermatitis (ACD). The randomized, double blind, placebo controlled, sample size adaptive design trial is expected to enroll approximately 46 patients in Part A randomized 1:1 between EB01 and placebo for 28 days of treatment. Following the enrollment of the first cohort, a blinded interim analysis will be conducted that can have the following outcomes: 1) stop the study for futility; 2) continue to the dose ranging portion of the trial with 80 additional subjects; or 3) continue to the dose ranging portion of the trial with 120 additional subjects. The primary endpoint of the trial will measure the mean percent change from baseline in CDSI at Day 29, with secondary endpoints examining symptom reduction, dose-response relationships, and safety. An outline of the trial is shown below.

In April 2020, the company filed a protocol amendment with the FDA for the ongoing Phase 2b trial. The amendment was filed such that changes to the study protocol could be made to mitigate the impact of the ongoing coronavirus pandemic. Included in the amendment were allowances for a reduction in the number of in-person office visits, remote telehealth appointments, and other procedural updates to simplify enrollment and patient care. In November 2020, the company announced that the trial has now enrolled >50% of the planned first cohort.

Financial Update

On February 16, 2021, Edesa announced financial results for the first quarter of fiscal year 2021 that ended December 31, 2020. The company did not report any revenues for the first quarter of fiscal year 2021 compared to $0.1 million in revenues for the three months ending December 31, 2019, which reflects the winddown and discontinuation of sales of product inventory obtained in the reverse merger. R&D expenses in the first quarter of fiscal year 2021 were $1.4 million compared to $0.5 million for the three months ending December 31, 2019. The increase in expenses was primarily due to increased external research expenses associated with the ongoing clinical trials and an increase in non-cash, share-based compensation. G&A expenses for the first quarter of fiscal year 2021 were $1.2 million compared to $0.7 million for the three months ending December 31, 2019. The increase was primarily due to an increase in non-cash, share-based compensation.

As of December 31, 2020, Edesa had approximately $6.3 million in cash and cash equivalents. Subsequent to the end of the quarter, the company raised net proceeds of approximately $3.1 million from the at-the-market (ATM) program and the exercise of warrants and stock options. We estimate that the company has sufficient capital to fund operations for the next 12 months. As of February 12, 2021, Edesa had approximately 11.0 million shares outstanding and, when factoring in stock options, warrants, and the Series A-1 convertible preferred shares, a fully diluted share count of approximately 13.5 million.


The CAD$14 million in nonrepayable funding from the Canadian Government to finish the Phase 2 portion of the ongoing Phase 2/3 clinical trial of EB05 is a great development for the company as it will allow for the study to be conducted in a more expedited fashion. We look forward to the first interim analysis, which should occur in the near future. While COVID cases have begun decreasing and the initial vaccines are continuing to be administered, there will remain a need for effective COVID-19 therapeutics. We have moved our DCF model ahead by a year, which has increased our valuation slightly to $16 per share.

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