ANVS - Annovis Bio: Buntanetap Likely To Disappoint In The Upcoming AD And PD Clinical Trials

2024-01-20 01:54:32 ET

Summary

• Annovis Bio has two upcoming major catalysts, a phase 2/3 AD clinical trial and a phase 3 PD clinical trial.
• The investigational drug, Buntanetap, is an enantiomer of a molecule previously tested for AD, with no success.
• We believe that the likelihood of success for Buntanetap in clinical trials is low, and if the drug fails, Annovis Bio's stock could plummet to or below its cash reserves.

Introduction

Annovis Bio, Inc. (ANVS), a clinical-stage biotech company founded in May 2008, was formerly known as QR Pharma, Inc. until 2019. Under the leadership of founder and CEO Maria Maccecchini, Ph.D., the company went public in January 2020 and has since seen its valuation increase by approximately 100%. However, its current valuation falls significantly short of its all-time high in July 2021, when the company's market capitalization was nearly ten times its present size. This major decline and the overall downward trend are largely attributed to the phase 2 data of the company's lead product, Buntanetap, which early trial efficacy in clinical measures for Alzheimer's Disease ((AD)) and Parkinson's Disease ((PD)) likely did not convince the investors.

Buntanetap, also known as ANVS401 (and previously referred to as Posiphen and (+)-Phenserine), is a small molecule drug. Its primary mechanism of action is to inhibit the overexpression of neurotoxic proteins in neuronal tissues. The drug is an enantiomer of the previously tested drug (-)-Phenserine and is hypothesized to possess slightly different pharmalogic properties.

Our analysis aims to assess the quality of evidence predicting the clinical success of Buntanetap and determine whether the company's pipeline will create long-term value for stakeholders. As Buntanetap is the sole product currently undergoing active human clinical trials at Annovis Bio, the drug's success or failure in treating PD and AD can be viewed as a binary catalyst. Should the drug prove effective, the company's valuation could multiply several-fold, potentially reaching a multi-billion-dollar market capitalization typical of companies in the AD and PD markets. Conversely, if the drug fails, the company's stock price could plummet, likely trading at or below its cash reserves.

Buntanetap and Phenserine

Buntanetap, a small organic compound with a molecular weight of 337.423 g/mol, is hypothesized to inhibit the transcription of neurotoxic proteins such as ?-Synuclein (?-Syn), Amyloid Precursor Protein ((APP)), and Tau, which are known pathological biomarkers in AD and PD. The molecule is also identified as (+)-Phenserine, distinguished from its enantiomer, (-)-Phenserine (referred to as Phenserine throughout this article). Structurally identical to Buntanetap, Phenserine's only structural difference lies in the three-dimensional arrangement of its atoms.

Both Phenserine and Buntanetap have been recognized as potential therapeutic candidates for AD , inspired by Phenserine's cholinergic properties similar to common symptomatic AD drugs, such as Donepezil. Interestingly, while Phenserine exhibits high anticholinesterase affinity (IC ₅₀ AChE Phenserine 22nM), Buntanetap lacks this quality (IC50 AChE Posiphen >10000nM). Nevertheless, both molecules have demonstrated the ability to decrease the translation of APP and ?-Syn in cultured cells.

Initially, Phenserine's combined cholinergic and inhibitory properties made it a promising drug candidate, leading to several clinical studies in AD. However, its development was halted following a phase 2 study that showed no significant cognitive change between the drug (30mg) and placebo at the 12th week mark.

Additionally, Phenserine was associated with dose-limiting toxicities, likely due to its cholinergic properties, which caused nausea and severe headaches.

Despite the failure of Phenserine, Annovis Bio was not deterred. The company decided to focus on developing Buntanetap for both AD and PD. They theorized that the absence of cholinergic properties in Buntanetap might be beneficial, potentially leading to reduced dose-limiting toxicity and allowing for more effective inhibition of neurotoxic protein translation.

Parkinson's Disease

Parkinson's Disease is a chronic neurodegenerative disorder characterized by both motor and non-motor nervous system impairments. The motor symptoms are primarily due to neuronal atrophy in the substantia nigra, a brain region integral for dopamine supply to the basal ganglia. Cellular death in this region is believed to result from the aggregation of toxic proteins like ?-Syn, which form Lewy bodies (protein aggregates) within neurons. Currently, there are no disease-modifying treatments for PD. Symptomatic treatments typically include L-DOPA, MAO-B inhibitors, and dopamine agonists, all aimed at increasing brain dopamine levels. To assess disease severity, clinicians employ several scales. The Hoehn and Yahr (H&Y) scale categorizes patients into stages 1-5, with 1 indicating minimal or no functional disability and 5 indicating confinement to bed or wheelchair unless assisted. Another related scale is the MDS-Unified Parkinson's Disease Rating Scale (MDS-UPDRS), assessing patients across four categories (non-motor experiences of daily living, motor experiences of daily living, motor examination on/off state, motor complications), with part III often constituting the bulk of the score.

Annovis Bio has completed several small, proof-of-concept studies and has initiated a phase 3 trial in PD (NCT05357989), enrolling just over 500 patients. This trial is designed to compare two doses of Buntanetap (10mg and 20mg) against a placebo, focusing on the change from baseline to 6 months using parts II and III of the MDS-UPDRS scale. Topline data from the trial is anticipated by the end of January 2024.

The preclinical data, which spurred the initial phase 1 and 2 studies, indicated reductions in neurotoxic protein concentrations in animal models and in vitro cell cultures. This finding aligned with expectations, as Buntanetap ability to reduce the translation of ?-Syn and APP had been established alongside Phenserine during its proposed testing for AD. The phase 1 and 2 trials (NCT02925650, NCT04524351, NCT01072812) provided further insights into the drug's efficacy, suggesting significant improvements on the MDS-UPDRS scale across various doses, as described in table 1 (values approximated from Figure 3 and the October 5, 2021, press release).

Surprisingly, significant changes in measured biomarkers were only reported for the highest dose of 80mg, despite this cohort not demonstrating the best response on the clinical scale. These changes were expressed as percentage variations from baseline to around day 25(+/-2), as described in table 2 (values approximated from Figure 4 and reported in a placebo/treatment format).

However, it's important to note that, in our view, this data provides rather weak evidence of the drug's efficacy. Notably, the drug did not significantly reduce ?-Syn in the 80mg cohort, which was a primary expected outcome. Instead, it only slightly halted overexpression. While the neuroinflammatory biomarkers showed the most significant reduction, these results were not impressive compared to other novel molecules tested. The most notable reductions, in the mid-teens for sTREM2 and GFAP, could be attributed to the common problem of multiple hypothesis testing.

In terms of clinical measures, the most effective responses were observed in the mid-dose range, which in our belief raises suspicions about the drug's actual efficacy. This pattern, coupled with a noticeable placebo response (a well-documented issue in PD trials), calls the results into question. By analyzing the crude and percentage MDS-UPDRS scores of the PD cohort and using the baseline MDS-UPDRS scores as a reference, one can estimate the phase III values based on findings from Skorvanek et al. (2017).

The placebo effect in PD, often attributed to changes in dopamine concentrations influenced by clinical trial expectations, can lead to short-term clinical improvements. Lou (2020) established that higher baseline motor MDS-UPDRS scores are predictive of a greater placebo response. Normalizing for baseline MDS-UPDRS scores aligns the observed improvements with this source of placebo effect.

Another potential issue that could affect the phase 3 trial results is the variance in inclusion criteria compared to the phase 2 trial. The ongoing phase 3 trial targets patients with H&Y scores of 1, 2, and 3, whereas the phase 2 trial included patients with scores up to 4. This suggests that the phase 3 trial may enroll healthier patients on average, potentially leading to different outcomes. Additionally, a recent paper in the Official Journal of the International Parkinson's and Movement Disorder Society questions the primary endpoint of the phase 3 trial. The authors, emphasizing patient input on clinical measure relevance, identified part 2 of the MDS-UPDRS as the most pertinent primary outcome, although part 3 is also considered important, particularly in early PD stages. Methodological concerns influenced this decision, necessitating a separate analysis of the combined primary measure.

Furthermore, the drug's proposed mechanism of action (MOA), which has been vaguely supported by previous clinical trials, may be insufficient to produce significant clinical improvements. The focus on targeting ?-Syn alone, while other trials (e.g., Prasinezumab , Cinpanemab ) that successfully reduced ?-Syn concentrations failed to show clinical significance, highlights the complexity of PD pathogenesis.

Overall, the data exhibits numerous inconsistencies and weak measures. Even if the observed biomarker responses are due to the drug's efficacy, the improvements appear marginal. While the motor clinical scale improvements were notable, normalizing for baseline MDS-UPDRS scores could diminish their significance. The likelihood of a placebo effect largely contributing to the observed data is high, especially considering that placebo responses typically peak around the 2-4 week mark.

Alzheimer's Disease

Alzheimer's Disease is the most common neurodegenerative disease, marked by a slow and progressive neuronal atrophy that clinically manifests as a gradual loss of cognitive functions. The precise cause and pathophysiology of AD remain poorly understood, in a manner similar to PD, it is likely caused by the aggregation of intracellular Tau protein deposits and extracellular insoluble A? amyloid plaques. Like PD, there are no disease-modifying treatments for AD, and current standard care focuses on symptom alleviation with acetylcholinesterase inhibitors such as donepezil. However, unlike PD, AD is primarily characterized by cognitive impairment, typically affecting memory, without motor impairments.

Drawing on preclinical data and previous investigations of Phenserine, Annovis Bio opted to test Buntanetap for AD, in addition to PD. Following the completion of the proof-of-concept studies, the company initiated a phase 2/3 clinical trial in AD patients (NCT05686044), enrolling approximately 320 participants. This study is designed to compare cognitive changes among three doses of Buntanetap (7.5mg, 15mg, 30mg) and a placebo from baseline to the 12th week, with topline data expected by the end of March 2024.

The premise of Buntanetap MOA in potentially improving AD's underlying pathology originally stemmed from Phenserine's clinical investigations. Although Phenserine showed some efficacy, it ultimately failed and was discontinued. Notably, the trend in cognition improvements associated with Phenserine was hypothesized to be due to its acetylcholinesterase inhibitory properties, not the inhibition of neurotoxic protein translation, a characteristic observed in both compounds to a similar extent.

In the same phase 1/2 trial discussed earlier concerning PD, a subset of AD patients was also analyzed. As with PD, the biomarker data for AD was underwhelming, reported only for the highest dose of 80mg. These results were expressed as percentage changes from baseline to around day 25(+/-2), as described in table 3 and 4 (values approximated from Figure 4 and presented in a placebo/treatment format).

The drug did not significantly reduce the concentrations of neurotoxic biomarkers; at best, it halted their increase compared to placebo. Similar to the PD cohort, a more pronounced response was observed in the concentrations of inflammatory proteins. However, these values only weakly support the drug's impact on the translation of pathological proteins.

In the study, a modest improvement in cognition (ADAS-Cog11) of approximately 1 point was reported in the placebo arm, with a more substantial improvement of 4.4 points observed in the 80mg treatment arm. No notable improvements were observed in the CDR or MMSE. This change might be attributed to the placebo effect and the expectations associated with clinical trial participation, especially since a small improvement was also noted in the placebo group. Additionally, the short-term better ADAS-Cog score might be partially due to the metabolite activity of Buntanetap. Although Buntanetap itself does not exhibit acetylcholinesterase inhibitory qualities, it has been established that its primary metabolites (N1-norposiphen, N1,N80bisnorposiphen) do.

The limited number of study participants also introduces a significant level of bias and the potential for results that may not be replicated in a larger clinical trial. Intriguingly, despite reporting values based on the 80mg dose of Buntanetap, the company structured the arms in the phase 2/3 trial with doses ranging from 7.5mg to 30mg (despite initial hopes of increasing dose compared to past Phenserine trials). Furthermore, the inclusion criteria between the trials differ in MMSE scores, with the phase 1/2 trial enrolling healthier patients (MMSE 18-28) compared to the phase 2/3 trial (MMSE 14-24). Both changes introduce higher variability, often leading to disappointment when larger trial data do not mirror earlier, smaller-scale studies.

While no drugs utilizing a similar MOA to Phenserine have been tested for AD, it is well-established that mere reductions or improvements in pathological biomarkers do not directly translate into clinical improvements. For instance, PBT2 , an iron chelator designed to inhibit the over-translation of neurotoxic proteins by decreasing brain iron concentration (influencing IRE), showed promise in a phase 2a study with significant changes in pathological biomarkers and a trend in cognition improvement measured by ADAS-Cog. However, a subsequent phase 2 trial failed to demonstrate cognitive improvements (NTB and MMSE). While not directly indicative of Buntanetap chances of success, this serves as an example of a drug with a similar MOA failing in consecutive clinical trials despite initially promising biomarker changes.

Considering all these factors, we believe that a positive readout for Buntanetap in AD seems unlikely. The structural similarity to the failed drug Phenserine, coupled with unconvincing early clinical data and the increased uncertainty due to changes in dose and inclusion criteria between studies, do not inspire confidence in its potential success.

Valuation and Cash Burn

Based on our assessment of the low likelihood of success for Buntanetap as a therapeutic agent for AD or PD, we predict a significant devaluation of Annovis Bio. If both clinical trials fail, given that Buntanetap is the company's sole compound currently in clinical testing, the stock is likely to plummet to or below its cash value.

Annovis Bio, with a current market capitalization of approximately $130M, stands to lose substantially in the event of unfavorable trial outcomes. As of Q3 2023, the company reported around $6M in cash, no debt, and approximately 10M shares outstanding. In a recent corporate update (January 2024), Annovis Bio announced an additional fundraising of $8M towards the end of November 2023. Prior to the operational expenses of Q4 2023, this suggests a cash reserve of about $14M to $15M. Disregarding forthcoming expenses for the purposes of conservative analysis, we will use the $15 million figure. A failure of Buntanetap, eliminating the value in the company's pipeline - a key driver of valuations in the biotech sector - is likely to cause a steep decline in the company's stock. We estimate the company's valuation to drop to or below its cash basis, equating to a share price range of $1 to $1.5. This figure is expected to decrease further by the time the study data is released, considering the company's substantial cash burn of around $33M over the last three consecutive quarters.

Conversely, if the forthcoming topline results from the PD and AD studies prove positive, or rather, will be perceived positively by the market, the company could experience a significant upside of over 100%. The PD and AD markets represent multi-billion-dollar opportunities, and companies showing success or promise in these areas often achieve multi-billion-dollar market capitalizations. However, even if the AD study yields promising results, it would likely necessitate an additional phase 3 study, incurring substantial costs and risks. A similar scenario could apply to the PD indication. In any event, Annovis Bio would need to secure additional capital to fund future operations, potentially diluting share numbers and exerting downward pressure on the stock price, which could temper the rally.

Verdict

In our assessment, Buntanetap appears likely to follow the trajectory of numerous investigational AD/PD treatments tested over the past two decades. The discrepancies between earlier phase 1/2 data and the upcoming phase 3 studies, combined with a limited understanding of the diseases' pathophysiology, the failure of Phenserine in AD, and the ineffectiveness of other ?-Syn-targeted treatments in PD, cast doubt on the drug's potential to deliver convincingly positive results in any upcoming data readouts. Moreover, the company's precarious financial position, characterized by a limited cash runway, signals a need for caution as Annovis Bio may need to raise capital in the near future.

The market's somewhat pessimistic view of Annovis Bio, as reflected in its relatively modest market capitalization, suggests a low chance of success. This context makes short-selling the company a potentially risky strategy, as any market-perceived positive news could lead to significant stock price surges. Consequently, we believe that a more risk-averse approach would involve engaging in put option trading. While the high implied volatility (IV) of the underlying assets limits the maximum potential gain, the strategy caps the maximum loss at 100% and eliminates the need for investors to maintain margin or bear the costs of share borrowing.

In conclusion, we believe Annovis Bio stock is a sell. However, investors should exercise caution and, if choosing to take a bearish position, ought to consider hedging or limiting risks associated with such investment activities.

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