2023-10-29 20:00:00 ET
Summary
- Reneo Pharmaceuticals is developing mitochondrial disease therapies, with its lead program being mavodelpar or REN001.
- Mavodelpar has shown promising results in increasing fatty acid oxidation and improving muscle strength in clinical trials.
- The company expects topline results from a pivotal trial in primary mitochondrial myopathy in 4Q23, with potential approval and launch in late 2024.
I covered Reneo Pharmaceuticals ( RPHM ) stock in May. Reneo is a developer of mitochondrial disease therapies. Its lead program is mavodelpar or REN001. Mavodelpar is in a pivotal trial in patients with PMM (primary mitochondrial myopathies) and long-chain fatty acid oxidation disorders (LC-FAOD).
Mavodelpar selectively targets PPAR delta. It completed a phase 1b trial in each of its two lead programs. Data has shown that it can increase gene transcription, increasing fatty acid oxidation and even help form new mitochondria, the powerhouse of the cell. A pivotal clinical trial in primary mitochondrial myopathy (PMM') is currently being run, with topline results in 4Q23.
In a phase 1 randomized, placebo-controlled leg immobilization study of mavodelpar in healthy volunteers, the molecule improved muscle strength within 1 hour and sustained it up to one week with statistical significance with p-value of less than 0.004.
The molecule was also tested in PMM patients. I discussed this earlier. To quickly recap:
The company also completed an open label phase 1b study in PMM patients with mtDNA defects and myopathies. 23 enrolled patients were given Mavodelpar 100 mg QD for 12 weeks, and then for 36 more weeks in an optional extension study. The study showed a mean change of 104 meters in 12MWT from baseline. Response rate was more than 80%, with 13 out of 17 evaluable patients showing a 50+ meter improvement. On various other parameters like walking velocity, mean oxygen consumption and changes in various other symptoms, too, mavodelpar showed improvements over baseline.
The company also tested mavodelpar in patients with long-chain fatty acid oxidation disorders (LC-FAOD) with 3 specific mutations. In two of these mutations, 12-minute walk distance increased in patients. Mavodelpar received a fast track designation from the FDA in one of these mutations.
Since my April article, one significant development has been the completion of enrollment followed by the last patient last visit (LPLV) in the pivotal STRIDE study in PMM. Topline data is now expected in December 2023 instead of in H1 2024. This also moves forward the regulatory process, and analysts now expect approval and launch in late 2024. In the ongoing extension study called STRIDE AHEAD, over 85% of eligible patients have been enrolled as well. Both these together will form the basis of an NDA in the first half of 2024.
There are 66,000 US patients for PMM and 82000 EU patients. Taking Japan, China and Brazil, there’s an additional 350,000 PMM patients. There are no approved therapies. The disease burden includes such symptoms as muscle weakness and fatigue, and could even lead to cardiac and respiratory failure, although rare. Thus, the disease burden is not enormous, although it is long term. I would peg annual cost of treatment here at $30,000, so the total addressable market would be around $2bn in the US. Since there is no other approved treatment, mavodelpar will have a superior position in the market. One could expect a 30% market penetration at peak, which would amount to $700mn in sales. That computes to more than double the current market cap of the company, in just this one indication, leaving a lot of room for the stock to grow.
Financials
RPHM has a market cap of $265mn and a cash balance of $143mn, which includes the $68mn they raised in May through a public offering. Research and development (R&D) expenses were $14.4 million during the second quarter of 2023, while general and administrative (G&A) expenses were $6.6 million. At that rate, they have a cash runway of 6-7 quarters, or just enough to see them through their first approval and launch.
PE/VC firms hold 45%, institutional ownership is 30% and retail holding is 15%. Key holders are Nea Management Co, Novo Holdings and Carlyle Group. Insiders have a few buys and a single sell in the last 2 years.
Risks
Like I mentioned last time, this is a single molecule company, so its fortunes rise and fall with mavodelpar, which they licensed for a small sum from vTv Therapeutics. As such, their composition of matter patent will last till 2026, giving them hardly 2 years of patent-protected market exclusivity. They also have orphan drug and NCE status, so that should give them a 7-year exclusivity. However, their method patents expire in 2034, so they have a fighting chance lasting until then.
Bottomline
RPHM is trading nearly at the same place where it was last time I covered it. It has an upcoming pivotal data drop, with a primary endpoint where it has already seen positive data, and it has enough cash to last it for a few quarters. Considering all of that, I rate RPHM a Buy, with a potential doubling of the stock from current prices on approval.
For further details see:
Reneo Pharmaceuticals: Buy Before Upcoming Pivotal Data Drop