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TLSA: In a Tizzy About Tiziana

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By John Vandermosten, CFA



We are initiating coverage of Tiziana Life Sciences PLC (NASDAQ:TLSA) (LSE:TILS) with a current valuation of $7.50 per American Depository Receipt (ADR) share (1). This present value is based on our probability adjusted estimates for successful Phase III confirmatory trials in progressive Multiple Sclerosis (pMS) with nasally administered foralumab and Crohn’s Disease (CD) with orally administered foralumab which we expect to yield registrational results in 2026. Tiziana is also starting a Phase II study in COVID patients with nasally administered foralumab. Tiziana is developing an anti-IL6 monoclonal antibody as a treatment for inflammatory pulmonary diseases such as acute respiratory distress syndrome (ARDS), COVID and interstitial lung disease (ILD). It is also planning a Phase II study with candidate milciclib in hepatocellular carcinoma (HCC). We attach value to the pMS and CD programs and model future revenues.

Tiziana is employing various pathways to address the active indications in its portfolio. Foralumab’s anti-CD3 approach tempers the body’s immune response by increasing the quantity of T regulatory cells, downregulating T cells and favoring the production of transforming growth factor (TGF)-β via the oral route and interleukin (IL)-10 via nasal administration, which creates a tolerogenic microenvironment. This profile is particularly amenable to targeted indications in pMS, CD and COVID. Milciclib is an inhibitor of multiple cyclin dependent kinases (CDKs) and employs mechanisms that can treat cancer by preventing over proliferation of cancer cells. Tiziana expects to launch a Phase IIb combination trial with milciclib and a tyrosine kinase inhibitor (TKI) in solid tumors and potentially other indications in the near future.

The candidates’ mechanism of action in Tiziana’s portfolio and their methods of administration bring new approaches to the table which are expected to work upstream of current standard of care, produce fewer side effects, enlist more precise activity and allow for targeted administration to the sites that present the disease. Foralumab is a fully human monoclonal antibody (mAb), evolved from the murine-based anti-CD3 OKT3. The mAb has also been successfully converted to solid form so that it can be administered orally or in a liquid form by the nasal and inhalation routes of administration. This allows for targeted delivery via a route that can avoid major systemic immune response common to infusion.

MS and CD are well-known diseases, each affecting millions of individuals around the globe, although presenting regional differences. Globally, MS is estimated to affect 2.3 million people and over 900,000 in the United States. Prevalence of MS generally increases as populations are measured in equatorial regions to areas further north. Women are also more likely to have MS than men. pMS comprises 10-20% of total MS cases and has limited treatment options. CD is more common in Western Europe and North America and has a prevalence of 100 to 300 per 100,000; the Crohn’s Foundation estimates about 780,000 individuals in the United States present the condition. Even numbers of men and women experience the disease and about half will go into remission after treatment. While COVID is highly prevalent today, ARDS, the underlying condition which causes severe lung damage related to COVID and other respiratory diseases normally occurs in about 111,000 individuals in the United States and 338,000 in other middle-class developed economies.

Approved treatment for these diseases presents drawbacks related to efficacy and side effects. Foralumab’s activity is a promising effort in improving how diseases are addressed. The biologic is a fully human monoclonal antibody that is less likely to stimulate a systemic immune response compared with previous generations that contained murine components. Another innovative use of foralumab is administration using a local delivery route (oral for CD, nasal for MS and COVID) thereby avoiding commonly used systemic intravenous infusions. The targeted use of the drug can reduce systemic side effects through the use of lower doses.

Tiziana Pipeline (2)

After raising $57 million (~£44 million) in August 2020 from a share issuance on NASDAQ, we estimate about £44 million in cash on the balance sheet as of December 31, 2020. The funds will enable Tiziana to launch the anticipated clinical trials in pMS, CD and COVID later this year. Funds on the balance sheet are sufficient for Tiziana to fund operations through mid-2022, at which time we expect an update on progress and additional capital raises. Tiziana carries no debt on the balance sheet and is funded solely with equity issuance. The company has guided towards approximately $30 million in expense over the next couple years.

We anticipate that pivotal data will be available for Tiziana’s programs in 2025 and 2026 and first sales will occur in the 2027 and 2028 timeframe for pMS and CD. We will forecast timelines for oncology indications and COVID/ARDS when further information and funding is available. We anticipate that all candidates will be developed in the later stages and commercialized with a partner. There is also a possibility that the alternative administration approach using oral, nasal and inhaled mAbs may be outlicensed to peers commercializing already approved products. This approach can take advantage of the reduced costs, increased ease of use and targeted administration.

Key reasons to own Tiziana shares:

➢ Multiple Phase II-ready assets pursuing unmet needs

◦ Fully human anti-CD3 - foralumab

▪ Multiple Sclerosis

▪ Crohn’s Disease


◦ Pan-CDK Inhibitor - milciclib


▪ Hepatocellular carcinoma (HCC)

◦ Fully human anti-IL-6 receptor – TZLS-501

▪ ARDS, ILD, COVID-19 and other diseases

➢ Oral, nasal and inhaled administration of antibodies

◦ Improved ease of use

◦ No need for hospital-based infusion

◦ Lower doses required for efficacy

◦ Reduced systemic exposure and toxicity

◦ Fewer side effects with reduced systemic exposure and toxicity

◦ Focused distribution at the target organs in CD and severe lung disorders

◦ Higher lung drug retention and efficacy while minimising toxicity to other organs

➢ Validation of intranasal foralumab technology in Phase I COVID-19 trial

◦ Phase II trial announced

In our initiation report we review Tiziana’s candidate portfolio including a review of each of the candidates, technology and clinical development. Indications for foralumab, including a discussion of the target disease epidemiology, symptoms, risk factors, pathophysiology, treatment and diagnosis are provided. We then discuss competitors, peers and competing therapies for the candidates and indications. Financial and operational results are presented, including an overview of the company’s financial position. Management is introduced and risk factors for the company are examined. Finally, we present our valuation methodology which employs a discounted cash flow model to generate our target price of $7.50 per ADR share (3).

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1. TLSA trades on the NASDAQ as an ADR. One American Depositary Share (ADS) is comprised of two ordinary shares and trades in US Dollars ($). Ordinary shares trade on the London Stock Exchange in Pounds Sterling (£).

2. Source: February 2021 Corporate Presentation

3. Tiziana trades on the LSE in Pounds Sterling (GBP) and as an American Depositary Share (ADS) on the NASDAQ in US Dollars at a ratio of two ordinary shares to one ADS. Financial reports are presented in GBP. We generate a target price in GBP based on forecasts in GBP and convert it to ADS in US Dollars using the GBP/USD exchange rate.