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Adalta’s Prospects Improve

Adalta’s (1AD) competitive prospects improved recently when a high profile drug, ziritaxestat, being developed by Galapagos and Gilead Sciences for idiopathic pulmonary fibrosis (IPF), was discontinued.

Two Phase III trial in IPF will be discontinued as well as a Phase II trial of a newer version of ziritaxestat, GLPG1690, in systemic sclerosis.

Ziritaxestat formed a part of a US$5 billion deal Galapagos and Gilead signed in 2019, with most of the deal value relating to filgotinib, which had been developed to treat rheumatoid arthritis, but failed to get approval in the US. To date Gilead had invested US$1.1 billion in Galapagos and holds a 26% stake.

Ziritaxestat is an autotaxin inhibitor (ATX). It had been observed in patients with lung fibrosis, that ATX levels increase in broncheoalveolar fluid. This then stimulates lysophosphatidic acid production, which then drives the production of pro-inflammatory signals and the promotion of fibroblast production. At this stage it is unclear whether the reason for the programs’ cessation was due to the target and the pathway, or the compounds.

This is the second ATX inhibitor to be cancelled, with Roche handing back BBT-877 to Bridge Biotherapeutics, in 2019, on the back of safety concerns.

The benefits to Adalta, according to CEO Tim Oldham, are that “there is now one fewer late stage competitor in the IPF pipeline and one less trial competing for IPF patients in Australia.”

Adalta is capitalised at $47 million and held cash of $8 million at the end of 2020 .

Bioshares recommendation: Speculative Buy Class A


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