GANX - Gain Therapeutics: The Case For GCase In Parkinson's And Buyout Potential

2024-01-12 18:49:40 ET

Summary

• Gain Therapeutics' drug candidate GT-02287 targets GCase and lysosomal dysfunction, potentially succeeding where others may fail.
• The company's AI-driven drug discovery engine has generated several targets across different diseases.
• GT-02287 is currently in a Phase 1 trial for GBA-1-PD, and Gain will add further preclinical data in February to its already interesting preclinical dataset.
• Gain's stock has been performing well, and similarities with a recent acquisition of Caraway Therapeutics by Merck may confirm its undervaluation.

Thesis

Though I had initially overlooked the potential of Gain Therapeutics ( GANX ), its drug candidate GT-02287 and recent AI-based partnerships and acquisitions have sparked my particular interest. GT-02287 targets GCase and lysosomal dysfunction. Ambroxol, currently in Phase 3 trials for PD, has received considerable interest from the scientific community for the same reason, but based on recent scientific findings, GT-02287 may succeed where Ambroxol may fail.

Gain’s management is not straight away pursuing idiopathic Parkinson’s, but focuses first on the subgroup whose biology matches its drug's MoA, PD-GBA1.

Gain’s stock has been performing well lately, after a dip in view of recent financing. Interestingly, half of the afore-mentioned financing came from one presumably knowledgeable financier. David Einhorn’s Greenlight Capital is another large investor.

At a market cap of about $55 million, I believe Gain is priced cheaply. The recent $610 million acquisition of lysosome-targeting Caraway Therapeutics could be seen as a confirmation of the right approach taken by Gain. Gain comes at one tenth of Caraway’s acquisition price and is further evolved.

Company

Introduction

Gain Therapeutics is a biotech company that has a drug target discovery engine designed to leverage AI-supported 3D structural biology and physics-based models, to find novel allosteric binding sites.

Gain’s AI-driven drug discovery engine has generated several targets across different diseases. This is its early-stage pipeline, with one Phase 1 trial that has recently been initiated.

The company’s lead product is GT-02287, which binds the most known genetic risk factor for Parkinson’s disease [PD], namely Gcase.

The company is currently enrolling patients in its Phase 1 trial for GBA-1 PD, which should report data in the second half of 2024. A first-in-patient 3-month proof of concept study could then start in the second half of 2024 in PD patients.

Gain’s drug discovery engine

Gain’s drug discovery platform focuses on identifying allosteric binding sites, which means places on proteins other than its orthosteric, or active, binding site.

Gain’s platform can identify novel binding sites on validated drug targets and 90% of proteins that used to be considered as undruggable.

Gain’s platform does not need prior data to identify novel binding sites on protein targets. Gain claims that speeds up the process of small molecule hit compound identification from two years to three months. Gain’s platform should enable the systematic discovery of those novel binding sites, where traditional drug discovery approaches do not.

I believe such an engine has considerable value and proven efficacy at this point. I will discuss the potential value of this engine and AI-driven big pharma acquisitions later in this article, after I have addressed the impressive efficacy seen so far related to GT-02287.

Several compounds have been generated through this AI-driven platform, the most important one of which appears to be GT-02287, addressing misfolded GCase. As it is a potential proof of the success of Gain’s platform, in light of recent scientific developments potentially setting it apart from other drug candidates, I will discuss it in detail below. I believe this is where most of the added value of the present article lies.

GT-02287

Introduction

GT-02287 is Gain’s orally administrable drug candidate, targeting glucocerebrosidase or GCase for the treatment of among others PD with a GBA-1 mutation and Gaucher disease.

GCase is a protein that is implicated in lysosomal function. The lysosome is becoming more and more established as a drug target in neurodegenerative diseases . Lysosomes are organelles within a cell that break down and recycle all sorts of material. GCase breaks down glucosylceramide into ceramide and glucose. Before GCase performs its most known function in the lysosomes, it needs to traffic from the endoplasmic reticulum or ER, where it is produced, to the lysosome.

GCase dysfunction in PD

PD is the second most common neurodegenerative disease, characterized by loss of dopaminergic neurons and deposits of Lewy bodies , which consist of aggregated ?-synuclein . GBA-gene mutations lead to GCase dysfunction, among others prohibiting the breakdown of ?-synuclein.

GBA mutations are the largest genetic risk factor of PD, conferring a 3-6-fold increased risk. Five to ten percent of all Parkinson’s patients have a GBA-mutation, and their disease starts at younger age. Persons carrying one GBA-gene mutation have a 10-30% chance of developing PD. GBA dysfunction in Parkinson’s accounts for 10% of all patients, namely about 100,000 patients in the U.S. and 700,000 patients worldwide. These patients also progress faster.

GCase dysfunction also leads the immune cells of the central nervous system, to become and remain neuroinflammatory , possibly through impaired debris removal because of lysosomal dysfunction. That neuroinflammation as such is a big risk factor in Parkinson’s and other neurodegenerative diseases . Being APOE4-positive, the biggest genetic risk factor for Alzheimer’s disease, also influences ?-synuclein pathology in PD dementia.

GCase and ?-synuclein also create a bidirectional loop whereby both lower GCase activity leads to more ?-synuclein, and more ?-synuclein leads to less GCase activity. This is how Gain’s competitor Vanqua Bio show GCase’s involvement in the disease.

Ambroxol as a GCase modulator for PD

Ambroxol , an ingredient of cough syrup, is one of such molecules of interest, that has received scientific interest and backing by the Michael J Fox foundation. It is currently in Phase 3 trials in PD.

Ambroxol treatment has been associated with increased GCase levels and activity, and decrease in ?-synuclein levels. The rationale for Ambroxol as a drug candidate for PD is that Ambroxol would allow GCase to reach the lysosome in increased quantity, where GCase could perform its function.

Recent research indicates a dysfunctional Gcase buildup outside of the lysosome

However, the recent discoveries of the lack of buildup of GCase in the lysosome, and its accumulation outside of it, may indicate that merely upregulating expression of misfolded GCase may not be the key to solving the underlying issue with mutant GCase. In fact, recent research has found no evidence of a glucocerebroside buildup in the lysosome, indicating the problem should probably not be tackled in the lysosome itself. Misfolded GCase does not appear to be transported to the inside of the lysosome, but rather builds up on its outside, where it interacts with a receptor called LAMP2A, that should help transfer into the lysosome. The GCase buildup at that receptor also blocks other proteins from being trafficked into the lysosome. Mutant GCase also impairs alpha-synuclein degradation.

Even more, whereas the normal GCase protein did not affect neuron death, mutated GCase does in the presence of ?-synuclein. Additionally, it was found in 2023 that mutant GCase also led to reduction of mitochondrial cell metabolism in people with GBA1 mutations. That fact could be linked to the mitochondrial hypothesis of Parkinson’s.

I quote a recent article in this respect: “ In addition, a new gain-of-toxic-function mechanism beyond the ER has been recently reported, where a fraction of mutant GBA that fails to fold in the ER is targeted to lysosomes to be eliminated by CMA; however, mutant GBA is retained in the lysosomal membrane and blocks the multimerization of LAMP-2A, impairing the normal uptake and degradation of other CMA substrates such as alpha-synuclein. ”

I also include a figure of another recent article showing where GCase is supposed to work, how alpha-synuclein is supposed to be broken down in the lysosome, and where LAMP-2 is situated

The results of GCase dysfunction may be fivefold at least:

- a disruption of trafficking of other proteins into the lysosome;

- a lack of clearing and subsequent accumulation of ?-synuclein;

- mitochondrial dysfunction ;

- impaired glial function / neuroinflammation;

- eventual cell death.

Ambroxol does not repair misfolded GCase, but only upregulates it. The same may be true for another drug candidate VQ-1010 from Vanqua Bio, which is considered to activate normal and mutant GCase, but not repair it. If GCase remains misfolded, and hence dysfunctional, in my opinion it will keep on being prevented from entering the lysosome, accumulate around LAMP-2, and therefore block trafficking of other proteins into the lysosome.

GT-02287 for Parkinson’s with a GBA mutation

This is, I believe, where GT-02287 comes in. GT-02287 should repair misfolded GCase inside the ER and should allow normal GCase levels to enter the lysosome, where they can perform their normal activity. This should decrease alpha-synuclein, improve lysosomal function, improve energy metabolism and mitochondrial dysfunction, reduce neuroinflammation and prevent cell death.

GT-02287’s proven efficacy so far: reduction of alpha-synuclein, inflammation, NfL and more

Over a rather brief period of time, Gain’s preclinical research has become abundant and positive.

- The company recently shared preclinical research showing reduction of alpha-synuclein and reduced inflammation through lowering of microgliosis. Alpha-synuclein and microgliosis/inflammation are two of the key hallmarks of Parkinson’s, and therefore this is the most important part of the preclinical research for me.

- In December 2022 , Gain had also reported on different preclinical research in rat neurons, indicating GT-02287’s statistically significant therapeutic effect on both neurite network and overall lysosomal health.

- At the same time, the company had reported dose-dependent and statistically significant improvements in motor deficits in an industry-standard model of Parkinson’s in mice.

- In August 2023, Gain presented preclinical data showing a significant reduction of plasma NfL levels when treated over the course of 14 days. NfL, a well-respected biomarker both by the field and the FDA, is a structural protein that is only found in neurons. Higher levels of NfL indicate more neurodegeneration, lower levels may indicate improvement and therapeutic efficacy. NfL has been accepted as a surrogate endpoint in ALS-SOD1, and may also be used as a biomarker in PD. Additionally, ?-synuclein, neuroinflammation and neuronal death in the brain were significantly reduced, and dopamine levels, motor strength and motor coordination improved.

- In another poster, the company showed that GT-02287 restored GCase levels, reduced the accumulation of GCase outside of the lysosome, reduced aggregated ?-synuclein, reduced inflammation (TNF-? levels), and improved lysosomal health.

Hence, in diverse tests and animal models, GT-02287 has now shown reductions of alpha-synuclein, inflammation/microgliosis and NfL levels, and improvements in lysosomal health, neurite network and motor deficits.

And the positive preclinical findings keep on coming. In the beginning of February, Gain will present a late-breaking abstract showing neuroprotection and recovery of motor function in a Parkinson’s model.

First-patient dosing in GBA1 Parkinson’s patients and potential expansion

On October 9, 2023, Gain has announced that dosing of the first two of a total of 72 study participants has taken place in its randomized, double-blind Phase 1 trial of GT-02287 for GBA-1 PD. The trial will have a single-ascending dose and multiple-ascending dose phase, intends to evaluate safety and tolerability of GT-02287, identify a maximum tolerated dose and recommended patient dosing. The trial will also assess GT-02287’s impact on lysosomal GCase. The SAD and MAD phases will respectively be in 40 and 32 subjects, for the duration of a 14-day treatment during the MAD phase.

Gain hopes to finish the MAD part of the Phase 1 clinical trial in Q2 of 2024, and then plans to add a cohort of 12-15 Parkinson’s patients in that trial to generate clinical proof of concept based on biomarkers of the GCase cascade. If successful, this may represent a major value inflection point for the program and the company.

GT-02287 for idiopathic PD and potentially Alzheimer’s

Gain qualifies as one of these exceptional companies whose management is not straight away pursuing the entire disease, but focuses first on the subgroup whose biology matches its drug's MoA. That may be a recipe for approval, as shown by Biogen in SOD1-ALS , and it is also one of several reasons I like INmune Bio ( INMB ) so much. Many biotech companies pursue the entirety of these vary heterogeneous neurodegenerative diseases with one treatment, not a combination, and I believe that to be risky when not accompanied by large trials over longer periods of time. Focusing on patients with MoA-matching biology may be a much-overlooked key to success, like it is in cancer.

Interestingly, scientific developments indicate that GT-02287 could also be used beyond GBA1-PD. In fact , lower levels of GCase are also found in people with PD who do not have the GBA1 mutation. Based among others on the above finding, the Phase 3 trial with Ambroxol is being tested in all Parkinson’s patients.

Gain has already shown that GT-02287 enhances GCase enzyme activity in wild-type, i.e. non-mutant, as well as in Parkinson’s and Gaucher disease fibroblasts. The enhancements are similar, with those in Gaucher disease being strongest.

That could potentially enlarge the market opportunity from $1 billion to $5 billion in peak sales potential. PD is the second most common neurodegenerative disease affecting 1 million people in the US, 10 million people worldwide, with no disease-modifying cure available.

Beyond PD, Gain has already done preclinical work in Alzheimer models as well, showing:

- at AD/PD 2022, a decrease of neuroinflammation and decrease hyperphosphorylated tau and increase in neuronal survival and neurite network in an AD model.

- at AD/PD 2023: a reduction of A?-1-42-induced neurotoxicity and tau hyperphosphorylation.

This makes sense, as a recent article in Nature mentioned that inhibition of GCase function led to lead to accumulation of tau, a hallmark of Alzheimer’s. Tau seeds isolated from AD brains induce lysosomal stress. Inhibition of GCase causes lysosomal dysfunction and contributes to the accumulation of tau.

To be clear, I do not expect one drug alone to solve an entire neurodegenerative disease. Combination therapies are the way forward for the treatment of neurodegenerative diseases as a whole.

GT-02287 for Gaucher disease

Gain is pursuing treatment of the lysosomal storage disorder Gaucher disease as well, and has published positive preclinical findings .. There are about 70 lysosomal storage disorders, and Gaucher disease is the most prevalent one. In Gaucher disease , inherited deficiency of Gcase caused by mutations in the GBA-gene encoding GCase leads to a glucosylceramide buildup in the lysosome, either because GCase did not reach the lysosome or because Gcase did not break down glucosylceramide in the lysosome. Scientific literature suggests that there is a potential therapeutic option for GCase enhancers. Not surprisingly, Ambroxol has also been suggested as a potential treatment here.

Further pipeline

Gain also has two compounds against GM1 gangliodosis, another lysosomal storage disorder. The company reported that GT-00513 and GT-00413 stabilized, enhanced and restored the lysosomal transport functions of ?-Gal, and reduced the levels of GM1 ganglioside in GM1 gangliosidosis patient-derived cells. There is also a compound trying to repair alpha-1 antitrypsin or A1AT deficiency. Seeking Alpha contributor Vision and Value has covered that compound a bit further.

Similarities with Biogen’s Alectos partnership and Merck’s Caraway acquisition

The lysosome is obviously an important area of focus for the treatment of PD.

When Biogen ( BIIB ) took a license on the novel preclinical selective GBA2 inhibitor from Alectos last year, in a deal with a total potential value of $722.5 million, the company stated:

“ Increasing evidence suggests that lysosomal dysfunction plays a key role in the pathology of neurodegenerative disease, including PD. ”

Then in November 2023, Merck ( MRK ) acquired private company Caraway Therapeutics in a $610 million deal . Caraway Therapeutics was a preclinical biotech company focused on the treatment of neurodegenerative diseases through activating autophagy and cellular recycling processes. Caraway had an integrated drug discovery platform – not AI-driven insofar as I can see - from which four preclinical drug candidates had emerged. Two of these modulated TRPML1, which regulates how the lysosome removes cellular waste. Caraway had shown that TRPML1 activation leads to upregulation of GCase. One of Caraway’s TRPML1-modulators was being developed for GBA-PD, and the other one for non-central nervous system rare diseases. Caraway further had a TMEM175-modulator to increase a lysosomal potassium channel in patients with Parkinson’s or ALS.

Big pharma interest in AI-driven companies

I have discussed before what the particulars were of Gain’s drug discovery engine, and how I believe the several preclinical results with GT-02287 have shown that it can work and bring value to its proprietor. From an acquisition or partnership perspective, these may be interesting times for Gain investors.

Big pharma investments in AI-driven companies are substantially growing on a yearly basis and were already $60 billion in March 2023, and over nine years’ time, the increase in AI-related investments has increased by about 27 times .

The expectation is that, by 2030, half of all drugs developed will involve AI. For good reason, AI seems to be a priority for many big pharma companies. Quite some nice deals have been announced in 2023. Sanofi (NASDAQ: SNY ) (SNYNF) stated it would like to become the first pharma company powered by artificial intelligence at scale.

AI is hot, and this is equally so for big pharma, looking at acquisitions and partnerships with big pharma merely for the last quarter.

All of that bodes well for Gain.

Finances

On November 14, 2023, Gain had cash of $12.3 million as of September 30, 2023. Gain’s cash burn for the last quarter was $4.9 million compared to $4.8 million the quarter before.

Some days later, Gain closed a $10.1 million public offering and private placement, with half of that additional financing coming from an accredited investor, namely Andrew Schwartzberg . Mr. Schwartzberg is currently a real estate developer, but used to work for SAC Capital Management, which was founded by billionaire hedge fund manager Steven Cohen.

That means the company should have about $22 million in cash at this time, which should last it about four quarter, assuming the spent does not go up majorly in light of the ongoing clinical trial.

Gain’s financial backing is also interesting. One of the investors in Gain Therapeutics is Greenlight Capital, David Einhorn ’s investment fund. Notably, Mr. Einhorn sits on the board of the Michael J. Fox Foundation, so I assume he gets the latest knowledge on evolutions in the field firsthand.

In his latest contribution , Seeking Alpha contributor Vision and Value went into more detail on the different businessmen and biopharma savants that have taken stakes in Gain Therapeutics.

Risks

Gain is an early-stage company. Regulatory issues may arise at any time, and GT-02287 has not yet proven that it is safe and tolerable in humans. If unsafe, the ongoing trial may be halted. As Gain’s pipeline depends largely on GT-02287, this may have a considerable impact on investor sentiment and valuation.

Scientific developments may bring new insights that make GT-02287 a less attractive drug candidate.

Competitive success may either lead to heightened awareness for GT-02287, or less interest in GT-02287’s potential success.

Gain’s valuation

At the time of writing, Gain has a market cap of $55 million. For simplicity sake, I attribute 50% of that valuation to GT-02287 and the other 50% to Gain’s AI-driven drug discovery engine.

Gain is an early-stage biotech company with a very interesting asset in GBA1 Parkinson’s, which may also work in Gaucher disease, and may also be efficacious in all Parkinson’s patients. Gain has several other early-stage compounds. It is hard to give a good valuation to drugs at this stage. Once the asset is particularly interesting, I believe the comparison with Merck’s acquisition of Caraway Therapeutics becomes interesting, as Caraway had several drug candidates targeting lysosomal dysfunction, including in PD. From the perspective of the value of that acquisition, i.e. $610 million, Gain’s market cap is nowhere near such value.

Gain additionally comes with an interesting AI-driven drug discovery platform focusing on allosteric or previously considered undruggable drug targets. I think it is guesswork for external parties to try to guess what could be the exact value of Gain’s AI-driven drug discovery platform. The fact that it is allegedly unique, that the above numbers for AI-driven acquisitions or partnerships in Q4 of 2023 alone are in between $140 million and $2.7 billion, indicate to me that Gain may be significantly undervalued.

Conclusion

Gain’s is a cheap early-stage biotech with knowledgeable financiers and quite some interesting things going on under the hood. I have tried to explain above why I believe GT-02287 could be a really interesting drug candidate from two main viewpoints. Lysosomal dysregulation in PD is hot, as most recently proven by Merck’s $610 million acquisition. Furthermore, GT-02287 seems to address what Ambroxol does not, namely repairing misfolded GCase so as to prohibit its accumulation outside of the lysosome and to allow its efficacy inside of it. There is abundant preclinical research adding to the scientific rationale, and Gain continues to add to that, with an upcoming presentation at the upcoming Annual WorldSymposium.

GT-02287 offers potentially valuable indication expansion opportunities in Gaucher disease, dementia with Lewy bodies, and Alzheimer’s, and Gain has reported positive results on two other compounds for GM-gangliosidosis, another lysosomal storage disorder.

Gain’s AI-driven drug-discovery platform is unique in its focus on allosteric drug targets. The recent partnerships and acquisitions of AI-driven drug discovery platforms indicate that that platform may be a second interesting asset owned by Gain.

The sum of both makes for a pretty impressive small biotech company with a low valuation. The fact that Gain is not afraid to consider that an acquisition may eventually be considered makes it an interesting company to own. When and whether such an acquisition may occur is of course always guesswork.

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