Actinogen (ACW: $0.042) recently passed the 'comprehensive' review by the external Data Monitoring Committee (DMC) for its Phase II/III Alzheimer's disease study with its drug candidate Xanamem.
Importantly, the committee had access to unblinded data, and recommended that the trial continue unaltered. Arguably, this can be seen to indicate that the trial may deliver a positive trial readout in November. The DMC looked at around 37% of all of the data, with full 36 week data from 52 of the 247 patients. On a recent investor call, Actinogen's CEO Steve Gourlay said "We are increasingly confident of a positive outcome."
The compound has cleared safety and efficacy futility hurdles. With more than 500 people treated, Xanamem has shown a very good safety profile with once a day oral delivery. Many patients have been taking Xanamem now daily for 36 weeks.
Following the passing of this milestone, Actinogen announced a capital raise for around $17 million at $0.045 a share. Gourlay will be investing $0.5 million in the placement, bringing his total investment contribution to Actinogen to $2.5 million. Gourlay said his investment is driven by the impressive data that has been achieved to date. Gourlay believes the probability of a positive result in November is between 70%-80%.
Following the results in November, Actinogen will engage with potential partners, who Gourlay said are watching the company closely. Gourlay added that the company may also look to secure a regional deal before November, but only if terms are favourable.
Path To Market Cleared Agreed with FDA
Actinogen has had a Type C meeting with the FDA, with clear direction on what it will take to get Xanamem approved. If the current study is positive, just one pivotal study would be required by the FDA for regulatory approval in the US, which would essentially be a larger version of the current study.
The FDA has also indicated that the unblinded analysis by the DMC has not compromised the statistical powering of the current study. Whilst the company awaits the results from the current study, it is now preparing for a final pivotal study to follow, pending positive results.
Strong Adoption Expected if Drug Approved
The company has surveyed Alzheimer's disease treating neurologists, with 80% indicating they would trial Xanamem within six months from approval.
If the results from the current study are positive, the compound may have a benefit in other neurological diseases and disorders, with cortisol, implicated in a range of illnesses. The application in depression, which many patients with Alzheimer's disease have also to deal with, is currently paused.
That the drug has a very good safety profile, and has shown to inhibit the target enzyme in the brain, suggests that there will be clinical benefit from this treatment. How much and the length of treatment benefit are the aspects to be determined.
Funding
Following the completion of the capital raise, the company will have a proforma cash balance at the end of last year of around $30 million, including advanced funding from the R&D tax rebate. There is also up to $5 million to be raised this year from the exercise of in-the-money options, and funds from any upfront payments from regional licensing deals that may be secured according to Gourlay.
Expect this stock to gain traction as it moves to a readout from this Phase II/III Alzheimer's disease study in November. Actinogen is capitalised at $151 million (including new shares to be issued under the capital raise).
Bioshares recommendation: Speculative Buy Class B
(The stock has been added to the Bioshares Model Portfolio.)
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