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Adalta Progresses GE Collaboration and Sets Clear Milestones for Path Ahead

Adalta (1AD: $0.155) has progressed its collaboration with GE Healthcare for its cancer treatment diagnostic.

In September Adalta signed a commercial deal with GE to find i-bodies using its unique technology that could very specifically bind to the enzyme granzyme B which is produced by activated T-cells.

Adalta has now identified several relevant i-bodies which will progress into preclinical development.

Granzyme B gives has the potential to be used by oncologists to establish whether the new wave of cancer therapies, including checkpoint inhibitors, are having an effect on patients early in the treatment process. The aim is to attach a radioisotope to Adalta's i-body which could then be injected into patients and imaged using a PET scan. Evidence of granzyme B binding in the tumour would indicate that there is localised T-cell activity and that checkpoint inhibition therapy is working. A lack of activity would signal that an alternative therapy should be prescribed very early on in the treatment process.

GE is now taking over the development of the program with Adalta to assist with related assay development.

GE is not without competitors. However, finding a binding agent to this enzyme is difficult. This is because there are no obvious pockets on the enzyme to bind to, according to Adalta CEO Tim Oldham. The feature of Adalta's i-bodies are their long binding loops that can provide sufficient contact area to bind to the target enzyme.

The next milestone (with milestone payment) is to achieve preclinical proof-of-concept, with GE to now work on the attachment chemistry between Adalta's i-bodies and the radioisotope, as well as selecting a lead i-body candidate.

We estimate that will take 12 - 18 months to complete. Features of the diagnostic to measure will include binding strength and specificity. To date, Adalta has received $1.4 million from GE with the program fully funded by GE.

The market for a granzyme B diagnostic could be worth between US$200 - US$400 million a year according to Oldham for early use as a diagnostic in clinical trials, and also to monitor checkpoint inhibitor therapy.

Immuno-oncology drugs are expected to reach sales of US$95 billion with this agent potentially a valuable companion diagnostic. We estimate Adalta will receive a single digit royalty from sales.

Clinical Program Update with AD214
Adalta has successfully completed the first part of the Phase I study with AD214 in 42 healthy volunteers who received a single dose. A positive safety profile was achieved, with binding to the target receptor also observed.

A multiple dose trial in healthy volunteers has started, with a Phase Ib study to commence in Q3 in patients with interstitial lung disease. The Phase Ib study will look at the safety of AD214 in patients with lung diseases when combined with standard-of-care treatment.

The Phase I multidose study in healthy volunteers is expected to be completed this year. The Phase Ib study in patients with lung diseases is expected to take one year to complete, however it will be an open label study with the potential for some early efficacy data during that period.

The Phase Ib study will include treatment with AD214, in addition to AD214 plus a low dose radioisotope labelled version of AD214 (around 1%) to provide information around deposition of the drug in the body. Development of radioisotope labelled AD214 has not been completed although it is in the late stages of development according to Oldham.

Milestones for 2021
By the end of this year, Adalta is seeking to have five programs in development, including AD214 and the GE collaboration. The company is seeking to sign a second drug discovery/development collaboration as well as adding two internal programs into its discovery engine.

Adalta is capitalised at $34 million and retained cash of $6 million at March 31, 2021.

Bioshares recommendation: Speculative Buy Class A


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