2023-04-18 08:00:00 ET
Summary
- Annexon targets complement mediated diseases and has multiple shots on goal.
- They have multiple proof of concept data, and upcoming catalysts.
- ANNX stock is trading at cash, making it attractive.
Annexon ( ANNX ) develops medicines for complement-mediated diseases. The complement system is a part of the body’s natural immune system that helps (complements) it clean up the body of pathogens, damaged cells and so on. It is also called the complement cascade, and consists of nearly 30 proteins. It is a very useful system when it functions properly, but sometimes it doesn’t. Then it goes and destroys healthy cells, proving, once again, that the human body is a manufactured machine, after all.
The complement system performs its destructive work using proteins like C5, and C3-C1 etc. Therefore, these proteins are important targets when the complement system needs to be regulated. A number of life-threatening complications like sickle cell disease, Huntington’s disease and so on may occur with a dysregulated complement system.
Annexon Bio has a program targeting some of these diseases by selectively targeting C1q, one of the important components of the complement system. Lead candidate ANX005 has produced proof of concept in multiple indications. It is an IV mAb in a phase 3 trial targeting Guillain-Barré Syndrome (GBS).
Here’s a look at the pipeline:
C1q is Annexon’s target in the complement system, and its molecules have shown robust engagement with it in body, brain and eye. ANX005 has shown full C1q inhibition in serum and CSF, while ANX007 has shown that in aqueous humor. ANX005/007 have shown clinical proof of concept in both neurodegenerative and autoimmune diseases.
In a phase 1b trial whose data was published in 2019, ANX005, targeting Guillain-Barré Syndrome, showed that it was well-tolerated and achieved full C1q engagement. This 31-patient study showed, among other things:
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ANX005 was well-tolerated at all dose levels and no drug-related serious adverse events or drug-related discontinuations occurred.
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Infusion of ANX005 resulted in full and prolonged C1q engagement and classical cascade inhibition, measured in the blood and cerebrospinal fluid ((CSF)).
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Patients treated with ANX005 showed significantly reduced levels of neurofilament light chain (NfL), a well-accepted marker of nerve damage in neurodegenerative disease that has been shown to correlate with disease severity and clinical outcomes.
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Patients treated with ANX005 also demonstrated consistent positive trends across key GBS outcome measures, including an early impact on muscle strength, which correlates with prognosis for long-term functional recovery.
A pivotal phase 3 study is ongoing and will report topline data in the first half of 2024.
In Huntington’s Disease, too, ANX005 reported phase 2 data last year. This 28-patient, open label study showed:
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Treatment with ANX005 led to complete and durable target engagement of C1q in both serum and CSF throughout the treatment period and well into the follow-up period
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Disease progression was stabilized in the overall HD patient population for the entire nine months of the study, as assessed by both cUHDRS and TFC, the two primary clinical measurement scales for HD
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In contrast, published natural history data show that HD patients are expected to experience decline over nine months as their disease progresses
The drug was generally well-tolerated, although there were 3 cases of treatment related SAE, which were resolved with drug discontinuation, and were in a subset of patients with elevated antinuclear antibody (ANA) titers at baseline. However, there were a total of 5 discontinuations including these 3, and this helped plummet the stock 30% on data release. The company, in future studies, will screen for the ANA biomarker, as no patient with normal ANA dropped out.
The molecule also has early POC in Cold Agglutinin Disease (CAD') and Amyotrophic Lateral Sclerosis (ALS).
The other molecule, ANX007, is targeting Geographic Atrophy ((GA)). They will report phase 2 data in mid-2023. Early studies have shown some proof of concept.
Financials
ANNX has a market cap of $241mn and a cash balance of $242mn. R&D expenses were $28.5 million for the quarter ended December 31, 2022, while G&A expenses were $8.2 million. At that rate, the company is funded through 2025.
ANNX stock has a high institutional, PE/VC and fund presence, with low retail ownership. Key holders are Muneer Sattar, well known investor, Bain and Venrock and the rest. Insider activity is unimportant/inconsequential because, besides Mr. Sattar's buys, it is small, low volume, mostly option exercises, and from a long time ago.
Bottomline
I think I like ANNX. They are decently funded but trading at cash, they have some good data and a major, untapped market where they have important upcoming catalysts, they have multiple shots on goal, and well, nobody has heard of Annexon. I should build a position, since they are selling stock for so cheap.
For further details see:
Annexon: Attractive, Below-Radar, Undervalued Stock