Antibe Therapeutics Inc(Pre-Merger) ATBPF

M Partners: Buy rating & $0.40 target for Antibe Therapeutic

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According to M Partners:

https://personal.crocodoc.com/LMVO8n0

March 12, 2015

ANTIBE THERAPEUTICS INC. (ATE – TSXV, $0.16)

Rating: Buy (was U/R)

New Target: $0.40 (was U/R)

ATB-346 TO RESUME DEVELOPMENT AT A LOWER DOSE

Antibe announced yesterday before market that the company has resumed development of its lead drug candidate ATB-346, after suspending the Phase I clinical trial due to safety concerns (as announced January 16, 2015) that could have been indicative of potential hepatotoxicity (i.e. liver damage). Antibe has collected and reviewed its Phase I data concluding it will continue with ATB-346 at a lower dose.

The company plans to conduct additional validating studies with ATB-346 prior to proceeding into Phase II, including a small human study to determine effectiveness at lower doses, as well as metabolite identification and characterization to determine pharmacological activity of the drug’s breakdown products.

Antibe will proceed with a dose at or below 250 mg, which is much lower than the 750 mg and 1500 mg doses at which safety issues were observed. The company concluded that ATB-346’s pharmacokinetic profile, coupled with data on cyclooxygenase inhibition in humans suggests a target therapeutic dose at or below 250 mg daily. ATB-346 was safe and well tolerated in the Phase 1 study at a dose of 250 mg given once daily for 14 days.

The single site Phase I trial enrolled 96 healthy human volunteers in a single ascending dose arm (SAD) and a multiple ascending dose arm (MAD). The subjects were grouped into 12 cohorts of 8 subjects with each cohort comprised of 6 subjects to receive the drug and 2 subjects to receive placebo. SAD: range from 25mg – 2000mg with each dose for one day, MAD: range 250mg – 1500mg each dose for 14 days. The company had previously announced the successful completion of SAD with no issues and at that time had progressed into MAD. The safety concern occurred in the 750mg and 1500mg dose cohorts in MAD.

Following the validation studies, Antibe anticipates continuing the previously planned development by running two staggered Phase II clinical trials; both studies are planned to be in the desired osteoarthritis patient population. Though more detail on the exact design and endpoints of the trial are needed, management believes that one trial will be a Phase IIa dose-ranging and effectiveness study in ~200 patients, while the other will be a Phase IIb proof-of-concept study on gastrointestinal safety also in ~200 patients. We believe the combined direct R&D of the validation studies and two Phase IIs could cost between $8-12 million over the next 18 months. We’ve assumed the company will raise equity to finance the costs of these trials.

We are resuming our coverage with a BUY rating and $0.40 price target (previously Under Review). The asset remains promising in an area of clinical need, and the company has generated positive pre-clinical proof-of-concept data along with GLP pharmacology and toxicology studies. We have made a number of changes to our estimates reflecting the clinical, timeline, and financing risks associated with the ATB-346 asset that we believe may still be a viable drug candidate.

Near term catalysts include:

Early (calendar) Q3 2015 – Results from validation studies

Q3 2015 – Begin Phase IIa

Q2 2016 – Phase IIa results

Q2 or Q3 2016 – Begin Phase IIb

Q2 2017 – Phase IIb results

COMPANY DESCRIPTION

Antibe Therapeutics Inc. (TSXV:ATE) is a clinical stage drug development company with a portfolio of patented anti-inflammatory drug candidates that focus on the non-steroidal anti-inflammatory drugs (NSAIDs) market. The company’s technology incorporates hydrogen sulfide-releasing derivatives that have been shown to reduce gastrointestinal damage of commonly prescribed NSAIDs. Antibe is based in Toronto.