MLTX - MoonLake Immunotherapeutics: Cosentyx Rival With Numerically Better Data

2023-04-27 09:30:23 ET

Summary

• MoonLake is a small Swiss company which licensed a great asset from Merck KGaA.
• This molecule, sonelokimab, produced potentially better data than blockbuster cosentyx.
• They are a bit low on cash.

MoonLake Immunotherapeutics (MLTX), based in Switzerland, is a clinical stage developer of nanobody therapeutics for inflammatory diseases. Lead asset is sonelokimab, a tri-specific IL-17A & IL-17F camelid-derived (ie, from the Camelidae family of mammals, such as camels, llamas, and alpacas) heavy chain nanobody. Sonelokimab completed a phase 2 trial in psoriasis, and is currently being tested in two phase 2 trials Hidradenitis Suppurativa (HS') and Psoriatic Arthritis (PsA). The company IPO-ed recently, in April 2022, raising $150mn.

Nanobodies have a number of advantages over traditional antibodies. They can be between a fifth and a tenth smaller in size. They can also be designed to bind to multiple binding domains. Sonelokimab, for example, binds to IL-17A and IL-17F as well as to human albumin. It is only ~40kDa in size, or about a quarter of a standard antibody, is humanized, and can be delivered subcutaneously in Q4W doses. The smaller size may help it reach otherwise inaccessible tissue as is common in inflammatory diseases, while albumin binding “may allow for enrichment at sites of chronic inflammation.”

In 2021, the company published data in Lancet from a robustly designed phase 2b trial. I call the design “robust” because they dared to put Secukinumab as the active comparator, and managed to do better. Secukinumab is, of course, Cosentyx, the market leader in plaque psoriasis treatment, developed by Novartis and making nearly $5bn in annual sales.

This multicenter trial tested four dosage regimens of Sonelokimab in 383 US/EU patients with “stable moderate to severe plaque-type psoriasis (defined as an Investigator's Global Assessment [IGA] score of ?3, a body surface area involvement of ?10%, and a Psoriasis Area and Severity Index score of ?12) for more than 6 months before randomisation, who were candidates for systemic biological therapy were included. Participants previously treated with more than two biologics or any therapy targeting IL-17 were excluded.”

Patients were assigned to either one placebo group, sonelokimab 30 mg group, sonelokimab 60 mg group, sonelokimab 120 mg normal load group, sonelokimab 120 mg augmented load group, or secukinumab 300 mg group.

The primary efficacy measure was the proportion of participants in the sonelokimab groups with an IGA of clear or almost clear (score 0 or 1) at week 12 compared with the placebo group. Also note that “the study was not powered for formal comparisons between sonelokimab and secukinumab groups.”

Here’s the data at 12 weeks:

The trial also showed that sonelokimab achieved clear skin (PASI 100) in up to 57% of patients at Week 24 and sustained responses over 52 weeks.

While the two drugs were not directly compared with one another, this is as good as it gets in a phase 2 trial in terms of comparison. Clearly, sonelokimab 60mg and sonelokimab 120mg augmented doses were non-inferior to secukinumab 300mg, which is a 2.5x larger dose. I say non-inferior conservatively. Note that “those assigned to the sonelokimab 120 mg groups received sonelokimab 120 mg at week 12 and then every 8 weeks (normal load group) or every 4 weeks (augmented load)” - which is the definition of the augmented load. Secukinumab patients received 300mg dose at the same load, ie, at week 12 and then every 4 weeks, the same as the augmented sonelokimab 120mg dose, so there can be no complaints there. Clearly, MoonLake went out of its way to give Secukinumab a level playing field.

In terms of safety, as well, the two molecules looked similar, except:

Over 52 weeks, sonelokimab safety was similar to secukinumab, with the possible exception of manageable Candida infections (one [1·9%] of 53 participants in the secukinumab group had a Candida infection vs 19 [7·4%] of 257 participants in all sonelokimab-containing groups).

Candida was 3-4x lower than with Bimekizumab, which is the only other molecule targeting both IL-17A & F.

The trial was conducted by Avillion of Illinois with whom Merck KGaA has a co-development agreement. MoonLake was established to develop Sonelokimab, outlicensed from and with clinical data generated by Merck KGaA, Darmstadt, Germany, and by Ablynx, a Sanofi company, which discovered the molecule. The effort is to beat cosentyx, which, when launched, performed much better than then available TNF molecules. Note that some of the MoonLake team were part of the Novartis team that developed Cosentyx. Sonelokimab has a slightly different mechanism of action compared to cosentyx, targeting as it does both IL-17A and IL-17F, whereas cosentyx only targets IL-17A and is also a monoclonal antibody, not a nanobody.

Despite being small and new, MoonLake was able to get the Merck deal because of, among other things, the CEO , who has had 15 years at McKinsey at Zurich. Here’s a brief profile :

Jorge Santos da Silva was previously Senior Partner at McKinsey & Company, Inc. For almost 15 years, Jorge was a leader in McKinsey's Pharmaceutical & Medical Products Practice and in the Company's Zurich office. He led several key groups at McKinsey over the last decade, including the Biotech group and the Biosimilars group, leading the consultancy's thinking in several biotech-related topics. Over the years, he advised international biopharma and biotechs, on corporate and business-unit strategy, commercial operating models, R&D, organizational design, M&A, joint ventures, and marketing and sales. Jorge is a Ph.D. in Neuroscience and has broad scientific experience in molecular-, cellular- and neuro-biology, with several high profiles peer-reviewed publications during his career in Academia. He performed his research and earned his degrees in different institutions including Cold Spring Harbor Laboratory, the European Molecular Biology Laboratory, and the Universities of Glasgow and Turin. Jorge is also a Professor and a Board advisor at the School of Medicine at the Minho University in Portugal.

Financials

MLTX has a market cap of $802mn and a cash balance of $72.1mn. Research and development expenses for the fourth quarter ended December 31, 2022 were $11.4 million, while general and administrative expenses were $5.3 million. The company says it has cash enough for key readouts plus 18 months. However, some of the key readouts will happen through 2024, and while they do not spend a lot of money, that is going to increase as they run their own trials. I doubt this cash will last them more than a year from today.

The stock is majorly owned by hedge funds, followed by insiders and institutions. Key owners are BVF INC, Cormorant and Merck KGaA. Cormorant made two large recent purchases.

Bottomline

I liked the molecule - Sonelokimab. I think MoonLake has been able to get its hands on a great asset. The company has low cash compared to most US pharma I cover, however, given their large hedge fund involvement, I doubt cash will be a problem if the data continues to be as robust as we have seen so far. The price is higher in the local range, but I am a buyer at dips.

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