ATXS - Astria Therapeutics: A First Assessment

Summary

• Shares of hereditary angioedema therapy concern Astria Therapeutics, Inc. have rallied on the back of some healthy patient data regarding its sole clinical candidate STAR-0215.
• The therapy’s defining characteristic is its long half-life, potentially permitting four-times-a-year dosing, as opposed to current therapies that are from once-a-day to twice-a-month.
• With four approved prophylactic treatments already in the market and two more approaching approval, the beneficial owner buying on its recent secondary merited a deeper dive.
• A full investment analysis follows in the paragraphs below.

No persons are more frequently wrong, than those who will not admit they are wrong .”? François de La Rochefoucauld

Today, we take a look at a ' Busted IPO ' that has gotten some traction recently on the back of some recent trial data. Does the rally have further to run? An analysis follows below.

Company Overview

Astria Therapeutics, Inc. ( ATXS ) is a Boston based, early clinical-stage biopharmaceutical concern focused on the development of therapies for rare and niche allergic and immunological diseases. The company’s sole clinical asset is STAR-0215, which is being evaluated in the treatment of hereditary angioedema [HAE]. The company was founded as Catabasis Pharmaceuticals in 2008 and went public in 2015, raising net proceeds of $61.7 million at $72.00, after giving effect to a 1-for-6 reverse stock split. After the company’s Duchenne muscular dystrophy candidate (edasalonexent) flunked a Phase 3 trial in October 2020, it hit the reset button by acquiring Quellis Biosciences for $170.7 million in January 2021, conducted a $110 million private placement in February 2021, executed the aforementioned reverse stock split in August 2021, and changed to its current moniker in September 2021. Shares of ATXS trade just above $14.00 currently, equating to a market cap of just under $400 million.

STAR-0215

With the acquisition of Quellis came STAR-0215, a monoclonal antibody inhibitor of plasma kallikrein, an enzyme that cleaves kininogen to produce the peptide bradykinin, which promotes inflammation and swelling. Excessive and unchecked kallikrein is a known contributing factor in the promotion of HAE. The disease is a very rare (occurring in ~1 in 25,000 individuals) and life-threatening genetic condition characterized by episodes of edema (swelling) in various parts of the body, including the hands, feet, face, larynx, trachea, and intestinal wall – the latter of which manifests in excruciating abdominal pain, nausea, and vomiting. Obviously, airway swelling can lead to death by asphyxiation. Currently numbering 20,000 worldwide, HAE patients have a defective gene that results in either inadequate or non-functioning blood protein called C1 inhibitor (C1 INH), which modulates plasma kallikrein. Without the C1 inhibition, unwanted peptides induce capillaries to release fluids into surrounding tissue, causing edema.

STAR-0215’s safety, pharmacokinetics, and pharmacodynamics are being assessed in a Phase 1a randomized, double-blind, placebo-controlled single ascending dose study in 25 healthy subjects. On December 15, 2022, Astria announced positive preliminary results, stating that its subcutaneously administered compound was well-tolerated across all dose levels (100mg, 300mg, and 600mg).

Furthermore, in the 300mg and 600mg cohorts, STAR-0215 demonstrated rapid and robust target engagement with plasma kallikrein inhibition through at least three months on a single dose. A key biomarker (FXIIa-activated cleaved high molecular weight kininogen) was decreased by 40% to 60%, which are levels consistent with HAE attack prevention. Half-life was estimated at 110 days. On the back of those results, Astria plans to initiate a Phase 1b/2 proof-of-concept trial in HAE patients in 1Q23 with an endgame of finding an appropriate dose for a registrational Phase 3 study.

The company also used the preliminary update as an opportunity to raise capital – more on that below.

HAE Market

If eventually successful, Astria will have plenty of competition in the HAE space, with four therapies approved by the FDA for each on-demand and long-term preventative treatment. The on-demand drugs include CSL Behring’s (CSLLY) C1 INH replacement therapy Berinert, Takeda’s ( TAK ) bradykinin 2 receptor antagonist Firazyr and plasma kallikrein inhibitor Kalbitor, as well as Pharming’s ( PHAR ) C1 INH replacement treatment Ruconest. They command slightly less than 40% of the market. Long-term prophylactics include C1 INH replacements from CSL Behring (Haegarda) and Takeda (Cinryze), as well as plasma kallikrein inhibitors from Takeda (Takhzyro) and BioCryst ( BCRX ) (Orladeyo). The global HAE treatment market was valued at $2.3 billion in 2021 and is expected to nearly double to $4.5 billion by 2027.

So, with a decent sized but certainly not massive market that is populated with plenty of approved therapies, a potential investor could rightly question Astria’s motivation for the clinical development of STAR-0215. The answer lies in the compound’s half-life. Management believes that it can be administered once every three months, whereas other preventatives are taken chronically. Cinryze and Haegarda are infused and injected (respectively) twice a week, whereas Takhzyro is normally injected every two weeks. Orladeyo is a once-daily oral taken with food. Obviously, the most direct competition is Takeda’s injectable monoclonal antibody Takhzyro, which generated twelve-month sales ending March 31, 2022 of ~$780 million. In clinical studies, Takhzyro demonstrated a mean reduction in HAE attacks versus placebo of 73%-87% with 31%-44% of patients attack free at 26 weeks. STAR-0215’s half-life is more than five times greater than Takhzyro.

That said, despite potentially having the most patient-friendly preventative option for HAE, there are no fewer than six other HAE clinical programs in Phase 2 or later studies – meaning they are all clinically more advanced than STAR-0215. Most notable is Ionis Pharmaceuticals’ ( IONS ) antisense medicine donidalorsen, which demonstrated a mean reduction in attack rate of 98.3% after Week 5 in the cohort receiving an injection once every four weeks. For all patients receiving donidalorsen in the study, 99.6% of study days were HAE attack-free. Additionally, CSL’s monoclonal antibody Factor XIIa inhibitor garadacimab achieved its primary and secondary efficacy endpoints in a Phase 3 trial. Announced in August 2022, the Australian concern was short on details, only to say that data will be forthcoming in scientific conferences and that it plans to file for approval in 2023.

Balance Sheet & Analyst Commentary

Immediately following the preliminary data release, Astria announced a secondary offering in which it raised net proceeds of $101.2 million at $11.01 a share. These funds, along with ~$12.7 million raised through its ATM facility after the close of 3Q22, will supplement the cash and investments of $116.6 million the company held on September 30, 2022. Its coffers should provide it a cash runway into mid-2025.

Since Astria pivoted to Quellis and STAR-0215, the Street has been unanimously positive, featuring three buy and three outperform ratings. Their median twelve-month price target is $20. It should be noted that four of the analysts represented firms that were bankers on the company’s recent secondary.

That said, Perceptive Advisors, represented on the board by Fred Callori, was impressed enough with STAR-0215’s preliminary results to purchase 908,265 shares on the offering, raising its total investment to 2.49 million shares, or just under 10%.

Verdict

With cash and investments slightly north of $200 million in its coffers at YE22, Astria is not absurdly cheap given that its sole asset has only been tested on healthy patients.

With initial results from its proof-of-concept trial not anticipated until mid-2024, there is going to be a yawning chasm of dead air from the company, notwithstanding the purchase or development of another asset. Given all the potential positive news coming from competitors between now and mid-2024, chances are that shares of ATXS will hit a dead pocket in the interim, providing an opportunity to purchase them cheaper. As such, we will stay to the sidelines for now.

Maybe this world is another planet’s hell .”? Aldous Huxley

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