RANI - Rani Therapeutics: Novel Drug Delivery System Under-Covered And Early Stage

2023-05-05 17:33:19 ET

Summary

• Rani Therapeutics Holdings, Inc. has an exciting oral drug delivery system for biologics.
• It has shown excellent early data in trials.
• However, the Rani Therapeutics Holdings, Inc. system is very early stage right now.

Rani Therapeutics Holdings, Inc. ( RANI ) develops orally administered biologics for various diseases. For an impressive technology, they count Novartis (NVS), Shire, and AstraZeneca PLC (AZN) as early venture investors. Last August, the company announced positive top-line results from a phase 1 trial of RT-101 in neuroendocrine tumors and acromegaly, as well as from another phase 1 trial of RT-102 in osteoporosis. The pipeline looks like this:

Octreotide is a synthetic somatostatin analog commonly used to treat acromegaly because of its potent inhibition of growth hormones, which is produced in overabundance in acromegaly patients. RT-101 is the first “RaniPill” formulation from the company, which enables pain-free, orally administered microinjection transenterically.

RT-102 is PTH-OP, or an oral formulation of a parathyroid hormone analog. Current osteoporosis PTH treatment requires a daily injection. RT-102 completed a phase 1 trial last year. The PK data is as follows:

As we can see, 80µg RT-102 had a much larger maximum serum concentration than standard osteoporosis PTH analog Forteo, and it was also absorbed over a longer period of time and had a much higher AUC. The differences are, thus, clinically significant between Forteo and RT-102, and since this is not a bioequivalence study, that is a good thing. There were no serious adverse events as well.

In a rat model, IP Delivery (to mimic RaniPill delivery) for 6 weeks Increased bone mineral density in ovariectomized rats comparable to SC Teriparatide Injections. The difference was numerically superior to both control and SC teriparatide. The company plans to focus on RT-102 as the lead candidate and initiate a phase 2 trial in 2H 2023.

RaniPill has an interesting delivery method, see this:

In the first picture, we see that the protective external cover saves it from the intestinal juices. As it leaves the intestine and this cover dissolves, there’s a balloon just below it which starts inflating. That pressure puts a microinjector located inside the capsule in active mode, and it injects transenterically. The balloon then deflates, and the whole thing passes on. Delivered deep inside the body, there’s no pain, and although this is, in essence, an injection, it is taken orally, with all the ease of oral use. And the best part is that the microinjectors are not metallic; they are complex sugar molecules containing the biologic in a solid form, and the whole thing is, well, biodegradable.

There have been efforts at other, possibly less novel technologies - permeation and absorption enhancers. But these have failed to compare well with the injection counterparts. Despite giving in doses that are dozens, sometimes hundreds of times more than injections, they have not attained bioequivalence. However, there is a patient preference from IV to SC to oral. Studies have shown a doubling of revenue when a medicine moves along this route. So, when Darzalex moved from IV to SC, sales increased 52%, and when Rybelsus was launched as an oral formulation, then, despite its bioequivalence problems, sales more than doubled. Thus, there’s a huge unmet need, and Rani plans to lead this space.

These RaniPills are being tested in various ways. They have shown high Bioavailability (65% for RT-101), and for RT-102, it was able to deliver at higher Bioavailability than SC, and the 80µg dose showed a PK profile similar to Tymlos at 80µg, a very efficacious osteoporosis drug. Repeat doses were tested and saw drug delivery in a reliable and stable manner. Doses before and after food were also tested, and device performance remained unimpaired by the presence of food.

Financials

RANI has a market cap of $233mn and a cash balance of $98.5mn. Research and development expenses for the three months ended December 31, 2022 were $10.4 million, while general and administrative expenses were $7.1 million. At that rate, they have a cash runway for 5 more quarters.

The company has had major early backers in its pre-IPO stage, including Google Ventures. The company stock has heavy public ownership, and institutions, PE/VC firms, and corporations hold 60%. Keyholder is InCube Lab, which spawned the company, and was in turn founded by Rani’s founder, serial inventor Mir Imran. Insiders are generally buyers, although the last nearly 20 buys are from a single insider.

Founder Mir Imran is a well-known inventor, holding over 400 patents, and he had a role in developing the world’s first implantable cardiac defibrillator.

Risks

Rani Therapeutics Holdings, Inc. is working on a very novel technology with huge potential. However, the company is still in a relatively early stage, and adequate de-risking of the platform will take another year or more. Meanwhile, it has less than $100mn in cash, which may not be enough to last until then. This is its biggest risk.

The company is also under-covered and has a low trading volume. This may make it difficult for investors to buy and sell their stock.

Bottom Line

Rani Therapeutics Holdings, Inc.’s technology is interesting, so far as its science goes. However, it appears that the company has so far not been able to deliver as much as it promised. Or rather, its potential hasn’t been fully realized. I think if the technology takes off, Rani Therapeutics Holdings, Inc. will be a good investment. However, investors should be aware that they are taking a risk in investing in a concept that is still incubating.

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